Good afternoon, ladies and gentlemen. We are pleased to welcome you to Bank Negara Indonesia, or BNI Analyst Meeting, first half 2022 financial results. We would like to express our gratitude for your participation, and we believe you are in such a great health during this difficult time. Before we head to the presentation, please allow me to introduce our Board of Directors members who are here with us. First, we have Bapak Royke Tumilaar, our President Director. Ibu Adi Sulistyowati, Vice President Director. Bapak Silvano Rumantir, Managing Director of Corporate Banking. Ibu Novita Widya Anggraini, Managing Director of Finance. Bapak Muhammad Iqbal, Managing Director of Micro, Small and Medium Enterprise. Bapak Sis Apik Wijayanto, Managing Director of Institutional Relations. Ibu Corina Leyla Karnalies, Managing Director of Consumer Banking. Bapak Y. B. Hariantono, Managing Director of IT and Operation. Bapak Henry Panjaitan, Managing Director of Treasury and International Banking.
Bapak David Pirzada, Managing Director of Risk Management. Bapak Ronny Venir, Managing Director of Service and Network. Ladies and gentlemen, our presentation for today will be started by Pak Royke with several management highlights. Pak Silvano will proceed with our accelerating business to top-tier industry players, continued by Ibu Susi with a highlight of our stronger transaction-based CASA through digital corporate service. To conclude the presentation, Ibu Novita will continue with our financial performance and the bank's approach to loan quality and risk management strategy. Ladies and gentlemen, our corporate presentation can be downloaded through the link that we provide in the chat room, or you may access our corporate presentation and other official publications in our website, www.bni.co.id. If you have any issues, please kindly reach out to investor relations via our email, ir@bni.co.id. Any questions are appreciated.
Please send your question to our email address, or you can simply send your questions in the Q&A box on your Zoom apps. Please remain silent during the presentation, which will last around 30 minutes. For today's event, we provide interpretation feature for you. However, all the presentations will be in English. Therefore, all attendees do not have to click the interpretation button during the presentations. The interpretation feature will only work during the Q and A session if our directors answer in Bahasa Indonesia. Now to begin the presentation, please welcome our CEO, Bapak Royke Tumilaar.
Thank you, moderator. Good afternoon for all analysts, shareholders, and rating agencies. I already appreciate your attendance here in BNI first half 2022 earnings call. Allow me to open the discussion by highlighting a summary of our performance. In the first half of this year, we grew our loan book by 8.9% year-on-year, faster than the growth momentum in previous quarter, and relatively in line with the overall growth in the industry. We continue to do the de-risking of our portfolio by focusing on top-tier clients in each business segment. At the same time, recycling our legacy book. We believe this is the right thing to do as uncertainty in the global economy is getting more intense nowadays and translating to volatility in the commodity price recently, especially palm oil. Third-party funds grew by 7% year-on-year, with CASA ratio at 69.2%.
The end of the quarter number was understated because a big outflow from one client from their business transaction. The funds already coming back in the first week of July. Cost of third-party funds improved by 8 basis points quarter-on-quarter and 27 basis points year-on-year, as we spend enormous effort to shift our funding base into the transaction-based CASA, which is sticky and insensitive to interest rates. This is crucial because we are going to enter rising interest rate environment. Core profit, or PPOP, is first half 2022 grew by 6.9% year-on-year. Net profit grew by 75% year-on-year, supported by asset quality improvement, where loan at-risk ratio is now below 20%, and cost of credit at 1.9% in the last quarter. The first half our net profit of IDR 8.8 trillion is 10% above Bloomberg consensus estimate.
One of the highlights in this earning call is our decision to revise down guidance on 2022 credit costs from initially 2%-2.3%, and now become 1.9%-2.1%. There are two reasons behind this. First, we believe we have set aside sufficient provisioning for the legacy book, where the provision coverage to loan at risk reached 42% higher than pre-pandemic level. Second, with regards the global economy uncertainty, we have been disciplined and very selective in new loan booking since last year, and still continue to do so. With this approach, future credit costs should be lower further. Various high frequency data on the economy also shows good trend of recovery, such as the number of foreign tourist arrival, people mobility index, and hotel occupancy rate. On the broader level, all these are reflected in the GDP growth, which is estimated between 5%-5.5% this year.
We just celebrate BNI 76th year anniversary this month, and we use this momentum to push our commitment toward BNI Go Green. Last quarter, we managed to issue our first rupiah Green Bond with three and five-year tenure. The IDR 5 trillion proceeds usage will be directed for financing our sustainable portfolio, especially renewable energy projects. On July, we also launched our support for electronic vehicle campaign by providing special pricing for EV financing and by collaborating with PLN to operate EV charging station. We believe we are the first bank in Indonesia which are launching this initiative. Finally, MSCI upgrades BNI waiting in their MSCI Indonesia ESG Leaders Index to top three in the country. This will give BNI a spotlight in the fast-growing global ESG funds. Focusing on SMEs, we potential to go global.
We launched Xpora in September 2021, which offer a comprehensive solution for SME exporters beyond lending, including business advisory, global market access, and payment solution. We offer bundled financial product with attractive discount for LC, discounting LC, collection, and remittance. Even the loan application process is simplified through digital portal. In the first semester 2022, IDR 7.2 trillion loan were disbursed through Xpora scheme. As the June 2022 total loan for export around it reached IDR 22 trillion, with trade volume at IDR 14.6 trillion and 39,000 SME debtors. BNI Xpora has gathered total cash worth IDR 3.9 trillion, grew by 30% compared to end of 2021. While all of our branches are able to provide assistance for Xpora, currently, we have seven physical hub and Xpora portals to support this initiative spread across Indonesia.
To support Indonesian entrepreneurs to expand their business overseas and to capture European market potential, we inaugurated BNI Amsterdam rep office in May 2022 to complement the existing overseas network in Singapore, Hong Kong, Tokyo, Osaka, London, New York, and Seoul. With this outstanding performance, we believe BNI Xpora will be one of our future growth engines and will strengthen BNI strategic positioning as a global bank and could increase our sustainable SME portfolio in the future. Pak Silvano, Managing Director of Corporate Banking, will continue the presentation on our accelerating business for top-tier industry player. Please, Pak Silvano.
Thank you, Pak Royke. Thanks everyone for attending this earnings call. Ladies and gentlemen, BNI's financial objective is to deliver best-in-class and sustainable ROE of 18% starting from 2025. We've been communicating also that the main assumption in our ROE projection is on significant reduction in credit cost, targeting only 1% CoC starting in 2025. This is achievable if we consistently continue our de-risking of our portfolio, starting from replacing legacy book with new booking from top-tier clients. Also capturing business opportunities along their value chain as sources of growth for commercial, SME, and consumer segments. In today's earnings call, we want to convey the message that our loan growth is gaining momentum with Q2 new booking of IDR 74 trillion, which was the strongest disbursement in the past six quarters.
In Q2 alone, we approved no less than IDR 30 trillion of loan facilities to top-tier clients such as Japfa, Kalbe Farma, Mitra Keluarga, AKR, Mayora, and so on, as you can see from the slides. We are still at a relatively early stage of fine-tuning our client mix, and the effort started roughly 18 months ago. We've been focusing on the so-called diamond clients, our internal term referring to key target clients, which consists of 88 highly reputable companies in prospective industry sectors. So far, we've seen remarkable progress where diamond clients already represent 23% of our Corporate loan portfolio from just 17% a year ago. The growth in outstanding loan to diamond clients reach 51% year-on-year. If we could sustain this momentum, soon our Corporate loan book quality will be very resilient across various economic cycles going forward.
We also nurture culture of collaboration within BNI, where Corporate Banking team and other business segments work very closely to grow our businesses together. In the first half of this year, there are 15,000 new payroll accounts, almost 6,000 payroll loans, and more than 1,000 mortgage bookings coming from the value chain of our top-tier Corporate clients. We believe that we are on track in terms of building an ideal loan portfolio mix. Competitive funding cost is one of the key success factors here as well. Acknowledging the strategic importance of building a sustainable CASA, our Deputy CEO herself is leading the wholesale and retail digital teams to strengthen BNI transaction banking capabilities and will proceed with the detailed presentation. Please, Ibu Susi.
Thank you, Pak Silvano. In BNI, one of the key initiatives we have is to build a stronger transition-based CASA. This is to ensure that in various interest rate cycle, our CASA remains sticky and cost of fund remain competitive. In previous earning call, we have explained our digital initiative in Retail Banking through major upgrade in BNI Mobile Banking capability. Now, I want to share with you the progress we have been achieving in wholesale banking side. Transactionally in BNIdirect, our cash management platform grew by 41% year-on-year and 17% quarter-on-quarter, driven by the growth in registered user as well as more client activity. Year-on-year, the daily average balance of demand deposit from BNIdirect active user have been growing by 16%. This enable us to rely less on specialty demand deposit and resulting in a resilient cost of fund.
In Corporate segment, cash management adoption among our client is already quite high at 91% coverage. However, in Commercial and SME segment, it only reached 26% penetration rate. Leaving ample room for growth in the medium term, we keep pushing our business unit to cross-sell our cash management product to their client. The lending rate pricing decision is highly dependent on whether client transition is already with us or not. We continue to upgrade user experience in BNIdirect. Some of the new initiatives, including providing seamless access to all business banking services, now available in a single integrated platform. As well as reducing onboarding processing from six days to only one day. Next topic regarding regular updating on our financial will be presented by our CFO. Please, Ibu Novita.
Thank you, Ibu Susi. Our loan growth of 8.9% year-on-year came from low-risk segment. Private sector corporate grew by 15% year-on-year. Large commercial, 31% year-on-year. Subsidized micro loan or KUR, 27% year-on-year. And parallel loan, 20% year-on-year. Loan to SOE still showing 2% contraction by design. CASA grew by 6.4% year-on-year and flat quarter-on-quarter. Note that there was a chunky demand deposit outflow near the end of the second quarter, but the fund already coming back in the beginning of July. This is natural as we serve mainly large corporate client. What more important is our Vice CEO mentioned just now that the transaction in our cash management platform grew by 41% year-on-year, translating to strong growth in average balance demand deposit.
As we shift our loan mix to low-risk segment, margin will come under pressure, but credit costs should also become much lower. In the first half of 2022, our NII was growing by only 1.5% year-on-year, and non-interest income by 11% year-on-year. But significant reduction in cost of credit has resulted in the bottom line growth of 75% year-on-year, reaching IDR 8.8 trillion. This is the slide of our key operating metrics. Cost of third-party fund improved slightly by 8 basis point quarter-on-quarter, as we cut funding cost at the end of first quarter and show the full impact on second quarter. As a result, net interest margin slightly pick up by 40 basis point quarter-on-quarter.
Return on equity was 15.1% in the first half of this year, versus 8.9% a year ago, driven by credit cost improvement, which came down by 130 basis points year-on-year. As our CEO mentioned earlier, we are getting more optimistic on asset quality trajectory shown by improvement in NPL ratio by 30 basis points Q-on-Q, and loan at-risk ratio by 250 basis points Q-on-Q. As a result, quarterly credit cost declined from 2.5% in first quarter to be 1.9% in second quarter. This was a fundamental improvement coming from a combination of good quality new loan booking as well as aggressive provisioning on legacy book with loan at-risk coverage reaching all-time high position. Liquidity remains sufficient with ending position LDR at 90%, while LCR and NSFR are well above regulatory requirement. We are managing liquidity carefully, especially during rate high environment.
Our strategy is to focus on increasing client transaction, both in BNIdirect and m obile banking application. Now, we are comfortable with our tier one CAR at 16.5%. Our conservative loan mix strategy will result the lower risk weighting in the long term. Core fee income on second quarter was strong on general. Retail fee income grew by 5.9% Q-on-Q and 5.6% year-on-year, driven mainly by bill payment to various third-party services, such as utility and lifestyle bill payment, and thanks to the consecutive upgrade in our mobile banking feature and more widespread API connection to other institution. In line with our effort to strengthen our IDD and Corporate Banking franchise, loans indication fee income grew by 47% year-on-year and almost double on Q-on-Q basis.
Since the beginning of the year, we already anticipated tough global market environment, driven by monetary stimulus normalization overseas. We already frontloaded realized gain from bonds portfolio in first quarter, and the result gain from the trading was much smaller in the second quarter. As we are a universal bank with a strong focus on the wholesale segment, some volatility on ending balance CASA is normal for us, like what we experienced at the very end of June. One of demand deposit outflow has resulted in bad portrait of our CASA, as if there was no growth. However, if we look into our cost of funds, it continued to improve with last quarter cost of funds at only 1.4%. Hence, we want to emphasize that the importance of looking into transaction velocity in our bank as opposed to only focusing on ending balance CASA.
We want to position ourself as a top-of-mind transaction banking of our clients. The more transaction done via our platform will translate to sticky CASA in the bank. Mobile banking application and BNIdirect are playing a crucial role in building transaction-based CASA. Almost 60% of retail saving comes from m obile banking, and 92% of demand deposit comes from BNIdirect. We closely monitor the growth of transaction in both platform, where during first half 2022, m obile banking and BNIdirect transaction grew by almost 40% year-on-year. I will now give regular updates on our asset quality. One of the indicator of improvement in our underlying asset quality is the continued decline of COVID restructure loan amount, which currently stand at 10.2% total loan. We always maintain our conservatism in terms of collectibility classification.
While OJK relaxation period still valid until March next year, we already classify the non-paying loan as either NPL or collectibility 2. Together, they represent 60% of this COVID restructuring loan. Another interesting data point is that 64% of the COVID restructure loan is paying at above base lending rate, which mean they are good candidate for unflagging in the near term. With this, we expect the loan at-risk ratio will decline meaningfully within the next few quarter. For those who are paying at below base lending rate, this represents a third of COVID restructure loan. We already set aside 22% provision coverage, and will add more for the rest of this year. From its peak on December 2020, total loan at risk has been declining, now at 19.6% total loan.
Year to date improvement mainly came from current restructure, declined by 290 basis points, as well as NPL and special mention loan, which declined by 50 basis points and 10 basis points respectively. We are optimistic with the asset quality trend for the rest of the year. Despite a positive trend in asset quality, we still consistently build a higher loan at risk coverage at 42%, and NPL coverage at 2.6x in first half 2022. Combined with the expectation of gradual reduction in loan at risk, this should translate to material reduction in cost of credit this year. We continue to assign a conservative provision coverage of 82% on average for those in NPL category, which we deem sufficient, considering LGD rate of around 60% up to 70%.
For those in collectibility 2, the provision coverage was 66%, much more conservative than regulatory suggestion, and provision coverage for current restructured loan was 60.2%, as we believe only a small portion of this bucket having high risk of downgraded to collectibility 2. This is the end of first half 2022 result presentation. Next, moderator will coordinate for the Q and A session. Thank you.
Thank you, Bapak Ibu, for the insightful presentations. Ladies and gentlemen, we are now entering the Q and A session. If you have any question, please send it to our email address, ir@bni.co.id, or you may send your questions in the Q&A box on your Zoom apps. If our Directors answer in Bahasa Indonesia, you are still able to listen to the English version. Please click the interpretation button on your Zoom apps and choose English, and then click Mute Original Audio. We received several questions regarding impacts to our business from commodity price volatility, higher inflations, liquidity tightening, and currency depreciation, and we will take the question one by one. Starting from the question that is related to commodity price movement, and I suppose it would be best if Pak Silvano could give us the insightful explanation for this one.
The question is from Sangameswar Iyer from Consilium Investment, and from Robertus Hardy from Henan Putihrai Sekuritas. The question is, how BNI see the loan demand and loan outlook for the rest of the year, especially with the commodity price started to slow down? Please, Pak Silvano.
Thank you. Thanks, Sangameswar and Robertus, for the question. Historically in Indonesia, banking industry loan growth is highly correlated with commodity prices. We think it is fair to assume that this pattern will repeat again, at least for the banking industry in general. Specific to BNI, the situation could be different in a positive way, and let me explain. We think it is important to highlight that in BNI, we are building our new portfolio focusing on top-tier clients. Half of our loan book comprises of Corporate segment. One of the characteristics of corporate clients, the top-tier ones, is their stability in the business model as they tend to take longer-term view in strategic decision-making. As a result, short-term volatility in commodity prices should not translate to fluctuation in loan demand, except for working capital loan, which is short-term in nature.
With this, we believe loan demand in the Corporate segment, which is our single biggest segment, will continue to be resilient. In addition, we also started from low base in terms of expansion to top-tier clients, which means that the room for growth is still ample. Our data point in Q2 showed that we are gaining momentum in terms of new loan booking. For the smaller size business banking segment, such as SMEs and mid-market commercial, we continue to be selective. On one hand, we have to appreciate that small businesses that survived during pandemic means they have proven business model and resilience in the worst operating environment ever. But on the other hand, higher inflation and commodity prices volatility may impact them more than large corporations. That it may affect their appetite for expansion.
Whereas for consumer loans, we did not see massive growth in the past six months, despite strong commodity prices. It seems that in general, people are more disciplined in terms of big spending decisions during this pandemic situation, unless the spending is really necessary. For example, purchasing a house for them to stay in as opposed to for renting out. Consequently, we also do not expect significant reversal in consumer loan demand. We are optimistic that we will be able to book low double-digit growth in consumer loan book this year.
Thank you, Pak Vano, for the clear answer. Once again, ladies and gentlemen, one of the important highlights is that our business to top-tier industry players who have stability in doing their business. The next question came from Angus Mackintosh from Smartkarma and Maynard Arif from DBS. This is about inflation. The question is, what are the bank's main concerns surrounding inflation in Indonesia, and is there any impact of the inflation to loan demand? We believe our CEO, Bapak Royke, could give us a clear answer for this question. Please, Pak Royke.
Thank you. We understand there are two macroeconomic challenges in this year. One is higher inflation and interest rate trend reversal. In terms of inflation, reported headline inflation in second quarter 2022 was at 4.35%, is already exceeding initial inflation target of the central bank. Even though the inflation rate is still considered moderate, we have to admit that the risk is there. Given rising volatility in the energy cost and exchange rate. Our loan growth strategy, which is targeting low-risk client, implies that our view on the economy is cautious optimist. We believe this is the right strategy to pursue since global economy is not a good shape, and there is a limit how much government could support domestic economy. Our data also shows that there are moderate level of correlation between high inflation rate and banking sector NPL.
Corporate segment asset quality remains the most resilient from time to time. Our loan demand and asset quality should be resilient toward moderately higher inflation rate because of the two factors. First, half of our book is on large corporate. This type of business are typically inflation-proof because of strong pricing power, both on the products sold to customer and their input costs. Secondly, our consumer loan exposure mainly comprise of fixed income earners, and their rates are inflation-adjusted annually. So the impact of inflation to loan demand and asset quality should be minimal. We think SME and micro segment could face bigger challenge in a high inflation environment.
Thank you, Pak Royke. One thing to note that the Corporate segment, which dominates our loan composition at more than 50%, their asset quality is proven to be resilient from time to time. The next question is from Handy Noverdanius from CGS-CIMB. The question is, does BNI worry about the tighter than expected of third-party funds for the rest of 2022 and going into 2023? Ibu Novita, would you please kindly answer this question. Thank you.
Thank you. Until the first half of this year, we were still seeing a healthy inflow of third-party funds by 7% year-on-year, supported mainly from CASA growth. Liquidity remains sufficient with ending position LDR at 19%. Despite improving current account trend of the country, we view that liquidity in banking system may not be as good as last year due to a loan demand recovery. At the same time, central bank strategy to absorb liquidity through reserve requirement policy hike. We are managing liquidity carefully, especially during the rate hike environment, and we target our low-cost funding CASA to grow sustainably higher than the industry average, while time deposit growth will be adjustable. We are comfortable with rupiah's liquidity. Our attention is more on the USD liquidity as Fed rate high will impact USD liquidity in every country, including Indonesia.
Potential liquidity scarcity means that we have to be selective in the terms of foreign lending through pricing mechanism. We expect foreign exchange lending yield will be trend higher following the global benchmark rate. In BNI, we keep adding more and more export-oriented client that will naturally bring foreign exchange supply to our balance sheet. We do it both in large Corporate segment as well as in SME segment through our platform Xpora that we launched since last year. Our strategy is to keep focusing on increasing client transaction, both in our platform, BNIdirect and m obile banking application, to shift our finding base into transaction-based CASA. We want to position ourself as a top-of-mind transaction bank in our clients. The more transaction done via our platform will translate to sticky CASA in the bank.
59% of our saving balance right now comes from regular mobile apps user, and 92% of it comes from cash management user, BNIdirect. Thank you.
Thank you, Ibu.
I want to add. [Non-English content ]
Sure, Pak.
I think since we are very active in the transaction banking, so we are try to accelerate the cash management system like BNIdirect. Now, I think more company or client, now they are using more about the BNIdirect. So we believe in the future, most of the corporate client now very attractive to using the BNIdirect. So we do not see any potential issue about the third-party fund because now we start to focus to make a client more comfortable with our platform for transaction banking and also mobile banking. Now we are very selective to lending in USD. Since the inflation and interest rate in U.S. is increasing, so we are now very selective on U.S. dollar lending.
Thank you, Pak Royke and Ibu Novi. We hope that can clear things out. The next question came from Yulinda Hartanto from BNI Securities. The question is, which level of rupiah depreciation that will prompt the management to slow down loan disbursement and its impact to credit costs? Given the nature for this question, I believe Ibu Novita will clear things out. Would you please answer this question, Ibu Novi? Thank you.
Thank you. Like Pak Royke already explained before, we anticipate that foreign exchange liquidity will tighten. We have been adjusting pricing higher in foreign exchange loan, as well as being selective in terms of client exposure. Gradually, we also advise our client to convert their foreign exchange loan into rupiah when it is appropriate to do so. By doing this, weakness in foreign exchange loan disbursement will be partially compensated by strong rupiah's loan disbursement. As for asset quality impact from risk of rupiah depreciation, we are managing it very closely. 80% of our foreign exchange loan book are naturally hedged. The borrower's revenue are in the foreign currency or their product pricing is tied to U.S. dollar. We also implement rule that 25% of the borrower net debt exposure must be hedged with bank's product.
Right now, 20% of our loan is in foreign currency, and with strict risk management practice we explained just now, we are optimist that the downside risk to asset quality is minimum. Thank you.
Thank you, Ibu Novita, for the comprehensive answer. Next question is from Selvie from Morgan Stanley and also from Ferry from Citi. The question is, what drives 40 basis points quarter-on-quarter NIM expansion? I believe Ibu Novita will give a clear answer for this question. Please, Ibu Novi.
What drive 40 basis points Q-on-Q NIM expansion? First, higher loan yield by 14 basis points, especially from foreign exchange loan pricing, which increased due to global benchmark rate movement. We refer to LIBOR and SOFR rate. Second, lower cost of fund by 8 basis points Q-on-Q and higher LDR ratio amounted by 19%, lower NPL ratio around 3.2%.
Thank you, Ibu Novi. Moving on to the next question. This is from Kresna Hutabarat from Mandiri Sekuritas, Devi Harjoto from KB Valbury, and Angus Mackintosh from Smartkarma. We believe Pak Royke will provide a great explanation for this one. Pak Royke, please kindly give us the update on the bank's overall digital strategy and the latest progress on the joint venture with Sea Group. Please, Pak Royke.
Thank you. BNI digital strategy is done at the BNI level and also through our new digital bank subsidiary. At the BNI level, our focus right now is to make BNI to be top-of-mind transaction bank for institutional and retail clients. We have upgraded our products in cash management, BNIdirect, as well as retail banking apps, BNI Mobile. Now, we focus on campaign to grow transaction value in those two platform in order to build stickiest transaction-based CASA. Along the way, we are still upgrading some features as well, making our platform to always meet customer demand and preferences. On digital bank subsidiary, which is designed to be our long-term growth engine in SME segment. Right now, our focus to set up the foundation of the bank, such as preparing for the IT infrastructure, the core banking and the technology, as well as appointing a key management team.
The digital bank first business will come mainly from pay later products, while at the same time they are building front-end digital product, which may take up to two years. Sea Limited as our tech partner has also been involved in this process. We are currently filing the Board of Directors and all of the three parties have agreed to select management independently to ensure this digital bank will be nimble and has a distinct competitive culture. In the course of the partnership, Sea will act in the common interests and effectively function with the mindset of a vested partner. When appropriate, Sea will take an equity stake in the bank. We are also planning to rebrand the bank in the near term with BNI's strong brand equity and active contribution from BNI, Mayora Group, and Sea Limited.
Our digital bank will be different from the rest of digital banks in Indonesia, especially in terms of funding cost competitiveness, technological leadership, and stakeholder relationship.
Thank you, Pak Royke, for the comprehensive answer. Jumping on to the next question, this is from Kresna Hutabarat from Mandiri Sekuritas. What percentage of BNI's loan outstanding is negatively exposed to the higher energy prices and vice versa? What percentage of BNI's loan outstanding that is positively exposed to the higher energy prices? We believe Pak Silvano can provide a clear answer for this one. Please, Pak Silvano.
Thank you, Kresna. Very good and valid question. I think we all agree that higher energy price is generally not good for most companies, except for energy producers. Energy is one of the biggest input costs for companies in various industry sectors, such as transportation and manufacturing. Energy price volatility have broad implication to companies directly and indirectly. To simplify this discussion, we will limit the analysis to the direct impact only, which is through revenue and direct cost. 4% of our portfolio are direct beneficiary of energy price increase. This include clients in the coal mining, and oil and gas value chain, excluding Pertamina. Palm oil historically also have correlation to energy price, and that represents approximately 7% of our portfolio. 24% of our portfolio are negatively impacted by higher energy prices, including those in general manufacturing and transportation sectors.
Note that when we mention the companies are negatively impacted, it doesn't mean that they're at risk of default. It simply mean that they will face rising cost pressure. Our NPL ratio will remain low as we've been repositioning our portfolio, focusing on top-tier corporates. These big corporations typically have strong pricing power to pass on cost pressure to their customers. They are also usually more agile in terms of cost-cutting in critical areas, and their debt burden ratio or leverage ratio is typically not excessive.
Thank you, Pak Silvano, for the clear answer. Ladies and gentlemen, we are entering the end of our analyst meeting. Thank you to all our BOD, and also thank you for all the attendees for your participation in our analyst meeting for first half in 2022. We hope that we have delivered our financial results for the first half of 2022 to all the attendees. Any questions that have not been answered, our investor relation team will happily accommodate you offline or online. Please reach out to us via email, ir@bni.co.id. We would like to express our gratitude for your participation, and we hope things are getting better, and we will be able to see and have discussion face-to-face as soon as possible. You may now leave the webinar room. Thank you, stay safe, and have a great weekend.