Good afternoon, ladies and gentlemen. We are pleased to welcome you to Bank Negara Indonesia Earnings Call for the first quarter of 2024. Good afternoon as well for analysts and investors who are joining on Zoom. Thank you for your participation. Before we dig deep into the BNI latest performance, please allow me to introduce BNI directors who are here with us. First, we have Bapak Royke Tumilaar, our President Director. Bapak Putrama Wahju Setyawan, Vice President Director. Ibu Novita Widya Anggraini, Finance Director. Bapak Agung Prabowo, Wholesale and International Banking Director. Bapak David Pirzada, Risk Management Director. The rest of directors and SEVPs are here as well. Ladies and gentlemen, our latest corporate presentation is now available. You can download it from the chat room, or you can find it on our website, www.bni.co.id, of course, along with other official publications.
If our directors present or answer your questions in Bahasa Indonesia, we have a translator. You can simply click the interpretation button on your Zoom apps and then choose English. If you have any trouble, please reach out to Investor Relations team on our email address, ir@bni.co.id. Our CEO, Pak Royke, will begin the session by discussing our management highlights. It will then be continued by Pak Agung. Ibu Novita will proceed with our financial performance update. Pak David will continue with our asset quality update. Since today's earnings call is hybrid, we have around 10 persons joining here with us. After the presentation, we will have a Q&A session. To begin the sharing session, please, Pak Royke, the floor is yours.
Good afternoon, everyone. Thank you for joining our first quarter earnings call. Allow me to start by highlighting our key performance metric, followed by a sharing session on key initiatives that we, the management team, are going to focus to execute this year. Overall loan demand environment was good despite challenging macro situation and initial concern about election uncertainties. We grew our loan book by 9.6% year-on-year in line with our target of 9%-11% this year. Source of growth continued to come from low-risk segment, namely corporate and consumers, consistent with our strategy, which focus on asset quality in the first five year on our transformation. CASA grew by 6% year-on-year as overall money supply growth in the industry was still not recovered to its normal level.
Cost of fund increased by 2.8% or 25 basis points higher compared to previous quarter, mainly driven by pickup in U.S. dollar funding costs, which is a global phenomena in most countries worldwide. Our margin was 4% in the first quarter, down by 35 basis points quarter-on-quarter. The weakness in net interest income due to margin pressure was slightly offset by strong fee income performance, growing by 21% year-on-year. We are actively offering various solutions to our clients to boost fee income generation. We consider this as asset light strategy that will enable us to deliver better risk-adjusted return to our shareholders. Loan at risk improved by 3 percentage points year-on-year, allowing us to book only 1% credit costs in first quarter. Earning after tax increased slightly by 2% year-on-year, driven by consistent asset quality improvement and strong fee income performance.
All of these are in line with our narrative to become a quality-focused bank in the country. I would like to share our transformation journey and key focuses in this year. On the first year, 2021, we focused on strengthening our capital in order to grab business in top-tier corporates. At the same time, we identify all watchlist team and prepare strategy to clean up our balance sheet. On the second year, we focused on improving our internal business process, especially related to the credit operation. We also started to fine-tune a performance management system in order to shift the bank's employee mindset into the meritocratic system. Lastly, we initiated talent management program to ensure the continuity of our transformation in the long run. On third year, 2023, we introduced agile organization structure, which is necessary if we want to be ahead of the competition.
We also enhance underwriting standard in Commercial & SME segment, starting on the second semester of last year. As we evaluate that the improvement in the headquarter has been in place, now in 2024, we want to emphasize on productivity boost in regional offices, including our commercial business centers spread across 19 locations in Indonesia. Our growth so far has relied on corporate banking and consumer loan. We want to prepare Commercial & SME segment to boost overall growth in the bank, while keeping in mind the asset quality cannot compromise. Now, I want to explain further our key initiatives to boost productivity at regional office and commercial business centers. As a result of digitalization and changing customer behavior, we see opportunity to change the role of our frontliners. You may know them as tellers and customer service officer at branch level. Until last year, we had around 6,800 frontliners.
Around 72% of our frontliners, or around 5,000 people, are now migrating into sales role. Some of them are dedicated salesperson who spend most of their time outside office hunting for new customers, and the remaining of them are customer service within our branch, who at the same time being a salesperson in their daily work. Not only adding the numbers of sales people by doing role migration, we also change the role of our existing direct sales person from specialist into generalist. We have around 1,200 direct sales person, which will actively cross-sell multiple products such as mortgage, personal loan, credit card, and funding products. This massive increase in salesperson and their flexibility to cross-sell are also equipped with sales tool upgrade to help them in identifying customer needs and proposing the most appropriate products to them.
In order to make them stay focused in business expansion, we sharpen their KPI by reducing it from initially 10 KPIs to now only max five KPIs. On the Commercial Banking segment, we start to actively recruiting experienced RM from market in order to accelerate business growth. As our corporate segment has been growing fast in the past three years, we realign KPI in commercial segment to focus on value chain execution instead of spending too much time on the new-to-bank customers, which we may not have a clear risk profile information. Pipeline management has been successfully implemented in corporate segment, and we replicate this in commercial segment now. Of course, we've close collaboration with their corporate banking counterparts.
By having a focused target market, which is corporate client value chain and clear pipeline, we expect the turnaround time for loan processing will be reduced toward best in class in the industry. We expect our initiatives to boost productivity will translate to stronger growth in upcoming years while keeping our overall asset quality stable over various economic cycles. Our AGM last month announced several changes in the management team. The changes are part of the majority shareholder commitment to support BNI transformation. Pak Putrama is now Vice President Director. Previously, he was the Retail Banking Director. The Retail Banking Director is filled with Ibu Corina, also not a new face in the BNI. The AGM has appointed several new members of the Board. Pak Agung Prabowo as the Director of Wholesale and International Banking.
Previously, he was a CEO at BNI Sekuritas and long-time investment banking head at UBS and Barclays. Pak Munadi Herlambang as Institutional Banking Director. Previously, he was a Board member at Jasa Raharja. Pak Paolo is a new Director of Digital Integrated Transaction Banking. Previously, he was SEVP Corporate Transformation in BNI and Bank Mandiri with management consulting experience at McKinsey . Pak Made is a new Director of Enterprise and Commercial Banking. He has a well-rounded experience in BNI over the past three decades in various role of regional office and international office, corporate banking, as well as Special Asset Management. Next topic will be presented by Wholesale and International Banking Director. Please, Pak Agung.
Thank you, Pak Royke. Ladies and gentlemen, previously Pak Royke mentioned about margin pressure from higher cost of fund, especially in the FX third-party funds. Just to give you some background on the supply and demand perspective, the growth of FX third-party funds in the banking system has been materially slowing down to only 5% year-on-year growth by the end of last year, as you can see in the charts with the yellow dotted line there. On the other hand, the FX loan demand continued to be strong, and banks need to be more conservative in FX liquidity management during these global uncertainties. We lower our FX LDR to below 90%, versus in the past, frequently it was above 100%. The combinations of strong loan demand and conservative liquidity management translates into strong demand for FX in the system.
As a result, cost of fund for U.S. dollar third-party funds increased to 3.4% in the first quarter this year, even higher than the IDR funding cost at the 2.6%. Breaking down by funding type, the steepest increase happened in time deposits, which touched 6.8% level last quarter. Facing the situations, we timely issued global bonds on early April, when market was still more stable than the situation nowadays. We successfully raised $500 million financing with attractive yield of 5.3% for five-year tenor bond. In addition to diversifying our funding sources, we will also be more selective in expanding our U.S. dollar loan portfolio and focusing more on the IDR loan. This is to reduce the pressure on our margin, as well as to minimize risk of exchange rate volatility. We understand our short-term challenge is funding cost.
Aside from that, we also need to keep paying attention on the importance of being ESG-focused bank, as our stakeholders put value on this aspect. So this year, we just announced a clear target to achieve Net Zero Emission from operational activities by 2028. That's four years from now. In terms of Net Zero Emission from lending, our target is aligned with the government, which is by 2060 at the latest. It may seem very long journey, but we have to understand that this is because Indonesian economy is still pretty much commodity-based. We export commodities, and most Indonesian population still needs affordable energy sources. So what is important is how we show our commitment along the journey. One, we are actively introducing sustainability-linked loan to incentivize our clients improving their ESG practices. We are also providing the pricing incentives for green loan.
Just recently, last quarter, we supported a big group, Barito Renewables, with the IDR 1.6 trillion loan to acquire a wind farm, a 75 MW capacity in Sidrap. From the bigger picture, our green portfolio grew by 23% compounded annual growth rate over 3.5 years, which is almost triple the loan growth at banking level, bringing the green loan proportion to 14% of our wholesale loan from only 8% in 2020. Now, Finance Director Ibu Novita will convey on our financial performance. Please, Ibu Novita.
Thank you, Pak Agung. Now we are going to discuss some detail on our financial. Loan growth was a 9.6% year-on-year, in line with our target, driven by corporate, consumer, and subsidiaries. Third-party funds grew by 4.9%, smaller than loan growth, as we are less aggressive on time deposit, which grew by 2.4% year-on-year, while CASA growth was 6% year-on-year. In a bigger picture, we need to minimize net interest margin pressure by having more optimum loan-to-deposit ratio, which now stands at 89% versus 85% a year ago. Now in our P&L, net interest income decreased by 9.8% year-on-year as cost of fund pressure continued until last quarter. Non-interest income increased by 14.6%, driven by fee income growth of 21% year-on-year, while cash recovery income was still lagging, only grew 1.4% year-on-year. OpEx was well managed at 2.3% growth, with cost saving in G&A expense decreased by 4% year-on-year.
PPOP declined by 5.4% year-on-year due to cost of fund pressure. Provisioning charges decreased by 19% year-on-year, with cost of credit at 1%. Bringing our net profit to grow slightly by 2% year-on-year. On loan growth, corporate segment continued to be main driver with 16% growth came from both private sector and SOE. On the SOE segment, net expansion was IDR 19.3 trillion year-on-year, mainly in exposure toward quasi-government institution like PT PLN, PT Pertamina, and Perum BULOG, as well as loan growth from strong SOE such as PT Pegadaian, PT Jasa Marga, and PT Telkom Indonesia. Consumer segment also showed consistent growth momentum at 13.6% year-on-year, driven by payroll loan and mortgages. We want to highlight that two of our subsidiaries, PT BNI Multifinance and hibank, started to give meaningful contribution to overall growth on consolidation basis.
Out of IDR 61 trillion year-on-year increase in our outstanding loan, around IDR 6.2 trillion or 10% of growth came from subsidiaries. The strong growth in both PT BNI Multifinance and hibank are also accompanied with improvement in asset quality as shown by NPL ratio below 2%. MSME still show contraction year-on-year. We are more confident in medium segment where asset quality started to stabilize. On the other hand, SME segment, especially KUR product, is still challenging to manage from asset quality perspective. We prefer to be extremely selective in KUR disbursement, not aiming to disperse more than we did last year. Loan yield slightly declined due to competition in consumer segment and low subsidy payment in KUR within SME segment. As of March, our CASA ratio was maintained at 70%. There is one positive development that we rarely see, that saving account didn't contract on quarterly basis.
We believe this was attributable to more transactional saving account in our balance sheet. We continue to spend effort to grow transactional savings account by increasing BNI Mobile Banking application. During Q1, transaction value in BNI Mobile Banking increased by 36% year-on-year. Looking into cost of fund breakdown, overall cost of fund increased by 25 basis points QoQ, with the biggest increase in time deposit rates, 53 basis points higher QoQ. U.S. dollar time deposit was the culprit. Hence, we issued global bond on early April with yield of 5.3% cheaper than U.S. dollar time deposit rate of 6.8%. Going forward, to avoid further pressure on U.S. dollar funding cost, we want to prioritize IDR loan over USD loan. Our latest asset quality update will be explained by Risk Management Director. Please continue, Pak David.
Okay. Thank you, Bu Novita, ladies and gentlemen. At the core of our transformation strategy is portfolio mix shifting to higher quality borrowers. With disciplined execution of the strategy over the last three and a half years, we continue to see defensive asset quality. Credit risk improved year-on-year by 300 basis points, now stands at 13.3%. This is driven by NPL reduction by 80 basis points year-on-year, as well as the upgrade in current rescheduled borrowers by 310 basis points year-on-year. Collectibility 2 ratio increased from 4.4% March 2023 to 5.5% in March this year. This is primarily driven by PT Waskita Karya (Persero) Tbk downgrade, which we already set aside a provision of above 60%. Quarter-on-quarter, the slight increase in LAR ratio by 40 basis points was due to a downgrade of a pharmaceutical company into Collectibility 2.
Aside from that, we also observe a higher Collectibility 2 ratio in SME segment. This is a sign of weakness, but we also observe this weakness in the banking industry. However, as SME segment only contribute around 10% of our book, the impact is relatively not material to our overall asset quality picture. Last quarter, we only book 1% credit cost because based on our review, we find positive development among our corporate clients that have fully recovered post-pandemic, hence we start to release provisions for these good borrowers, resulting in - 0.6% credit cost in corporate segment. We also want to highlight that we continue to be conservative in provisioning policy for segments that's still facing a challenge in term of asset quality like SME segment. We still book elevated level of credit cost as shown on the upper right table on the slide.
Despite 1% cost of credit, we maintain sufficient NPL coverage at 330% and LAR coverage at above 50%. Overall coverage for bank-wide portfolio, or we call as the loan loss reserve ratio, is maintained very conservative at 6.7%. This is shown on the bottom left of the slide. Coverage for Stage 2 loan is 27%, and for Stage 3 is ample at 74%. Now I will give it back to the moderator for Q&A session. Thank you.