Good morning, ladies and gentlemen. We are glad to welcome you to PT Bank Negara Indonesia (Persero) Tbk virtual analyst meeting on financial results for the first half of 2021. We hope you are all safe, healthy, and doing well. Proudly, we will introduce our Board of Director members who are attending the analyst meeting presentation, as well as the Q and A session. Together with us now, Mr. Royke Tumilaar, President Director. Mrs. Adi Sulistyowati, Vice President Director. Mrs. Novita Widya Anggraini, Managing Director of Finance. Mr. David Pirzada, Managing Director of Risk Management. Mr. Silvano Rumantir, Managing Director of Corporate Banking. Mr. Henry Panjaitan, Managing Director of Treasury and International Banking. Mr. Sis Apik Wijayanto, Managing Director of Institutional Relations. Mr. Muhammad Iqbal, Managing Director of Micro Small-Medium Enterprise. Mrs. Corina Leyla Karnalies, Managing Director of Consumer Banking. Mr. Ronny Venir, Managing Director of Service and Network.
Mr. Bob Tyasika Ananta, Managing Director of Human Capital and Compliance. Mr. Y.B. Hariantono, Managing Director of IT and Operations. For our guidance, Mr. Royke Tumilaar will begin by presenting several management highlights. After that, Mrs. Adi Sulistyowati, together with Mr. Muhammad Iqbal, will deliver corporate transformation highlights. Mr. Y.B. Hariantono will explain the corporate's digital initiatives and strategies. Continued by Mrs. Novita Widya Anggraini, the highlighted result of first half financial performance. To close the presentation, Mr. David Pirzada will elaborate the bank's loan quality and risk management strategy. The corporate presentation can be downloaded through the link we provide in the chat room. In case of any difficulties to access the link, kindly contact IR team through email address ir@bni.co.id. Any questions are welcome. Please send it to IR email address to be followed up in the Q and A session.
The presentation will be running for about 30 to 45 minutes. Please stay on mute meanwhile. Now, to commence the presentation, please welcome our CEO, Mr. Royke Tumilaar.
Thank you, moderator. Good afternoon, ladies and gentlemen. Please allow me to spend the opening section of today earning call to highlight second quarter 2021 results, and provide our direction in entering the recovery year of 2021. I will then turn the call over to my fellow boards member. The pandemic has been going on for more than one year, and as the audited financial numbers show, we are quickly adapting to the new normal. Continuing the latest positive trend during first quarter 2001, most of our financial indicators are showing solid improvements. PPOP at IDR 8.2 trillion, was the highest quarterly number we ever book. There was a slight compression on the net interest margin due to lower yield in the marketable securities, while loan yield was relatively stable. At the same time, we also managed to lower cost of fund by 10 basis points quarter-on-quarter.
Loan at risk improved by 110 basis points to 25.8% on June, thanks to gradual recovery of client situation under restructured category. Despite improving trend in loan at risk category, we continue to conservative in building provision with 3.5% cost of credit in second quarter 2021, stable quarter-on-quarter. We believe this is a prudent approach as the country is still fighting against Delta variant of COVID-19. The reason for strong PPOP in the second quarter was solid top line, both from the net interest income and fee income. On the net interest income, we managed to maintain stable loan yield while at the same time deliver loan growth above industry average. We were also closely managing cost of third-party funds by reviewing counter rate time deposit from time to time, as well as focusing on building sustainable CASA.
Our counter rate time deposit was 2.85% during the second quarter, which was almost 30 basis points lower than in the first quarter. As you could see from the slide, we see from the lower it further by 10 basis points starting on August. Almost all fee income components show strong rebound. Trade finance, for example, was growing by 20.4% year-on-year and 32.1% quarter-on-quarter due to strong commodity demand from developed countries. In addition to macro factor, the growth was also assigned preliminary result of our focus on fee income area within wholesale banking, as we mentioned earlier this year. E-channel, without any doubt, also grew strongly by 9.8% year-on-year in line with shifting consumer behavior toward digital banking services. Last month, we announced share buyback program which will be executed until the October.
We believe it is the right time for us to do a share buyback as BNI valuation multiple has not reflected key progress of our transformation program. On the digital front, we managed to turn around our mobile banking application quality, and now it has the highest customer rating in the Play Store and the most complete features among major banks in Indonesia. We also believe a leader on open banking ecosystem with the highest number of API connectivity with the other ecosystem. The latest development was we become early adopter of pay later business in collaboration with Traveloka and Shopee. Behind our record high PPOP, both our cost of fund and cost to income ratio are now the second lowest among major banks in Indonesia. We are running a cost-efficient business model focusing on being the most profitable bank in the medium term.
Despite ongoing pandemic, our asset quality indicators such as loan at risk and loan at risk coverage have been improving consistently. We want to emphasize here that the buyback program does not contradict our goal to build a fortress balance sheet by having a higher capital. Buyback will have only a very small impact on the capital and only for the short term. We plan to allocate the buyback share for management and employee stock option program by next year. Hence, our capital will increase again. This long-term incentive program tied to share price performance is part of management strategy to align our remuneration with minority shareholder interests. One of the corporate transformation goals in wholesale segment is to capitalize our cross-selling and upselling. We want to offer comprehensive solution to corporate clients beyond plain vanilla lending.
We strengthen our investment banking capabilities by upgrading BNI Sekuritas team and establishing a Singapore office. Agung Prabowo, previously the UBS Head of IBD Indonesia, is now CEO in BNI Sekuritas. We also established BNI Securities Singapore to enable us to enhance product offering and seek to generate fee income by leading international capital market transaction for issuer clients. The CEO for the Singapore entity is Leonard Ng, previously an investment banker with Standard Chartered, helped by Robin Goh and Edwin Chew. Both are experienced bankers with Commonwealth Bank and Deutsche Bank Singapore. I would now like to turn the presentation over to Ibu Susi, our Vice CEO, to highlight some update on corporate transformation. Bu Susi, please.
Thank you, Pak Royke. We start our transformation journey in January this year, and in the last five months, we have made several deliveries. On the digital front, as mentioned by Pak Royke earlier, we are speeding up our digital transformation. on 5th of July 2021, we launched our new mobile banking app featuring an all new looks and feels as well as streamlined navigation, which incorporate the bank's brand values. The launch also marks the third transformation of our mobile banking evolutions since release in 2016.
We are also improving feature in our mobile banking application with leading feature like biometric login, digital account opening with facial recognition feature, digital loan, clear card billing integration, investment in bond and mutual fund, QR payment which is accepted in all retail merchant that already adopt a standardized national QR system as well as live gold Tabungan Emas, which will allow customer to set specific monthly auto-debit deposit amount and tenor for each gold they have made. Completeness of feature is currently our competitive advantage over peers. The number of BNI mobile banking customer continue to grow by 57% year-on-year, reaching 9.3 million users. They are also getting more engaged with our apps, are reflected in the rating on Android Play Store, which continue to be the highest among all BUKU IV banks, and its number of transition will keep up growing immensely.
Ladies and gentlemen, SME plays a crucial role in Indonesia. Revenue-wise, it contribute to almost 40% of Indonesia GDP. In general, most of SME products are currently consumed domestically, despite the quality potential that could compete in the global market. On 2020, SME contribute to 14% of Indonesia export, and government has been targeting the contribution to increase to be 22% by 2024. To achieve this, SMEs need to be supporting by all parties from government institution, to banking industry, to tech part in global supply chain. BNI Xpora have unique solution to support SME exporter. In addition to improving bundle financial solution with competitive pricing, BNI Xpora offer various fully added services. For example, one, global market access through partnership with e-commerce and global trade association. Two, advisory on how to do export, including licensing and tax information.
Three, integrated business productivity tool to upgrade SMEs business, such as accounting and bookkeeping service in collaboration with startup. We are just in the early state in the journey. However, our initial research suggests that this profession resonate well with our customer. We believe that BNI Xpora will strengthen BNI strategic positioning in market, and all increase our sustainability SME portfolio in the future. Further detail on Xpora will be explained by Mr. Iqbal, our Director of MSME. Please, Mr. Iqbal. Thank you.
Thank you, Ibu Susi. Focusing on MSME, with potential to go global. BNI Xpora has three target market, namely established exporter, new exporter, and exporter supporting businesses. Previously, Ibu Susi has mentioned several beyond lending solution for SMB exporters, such as business advisory, global market access, and payment solutions. Through this solution, BNI aspires to become an orchestrator in MSME ecosystem that will help to connect domestic MSME to global buyers, as well as to connect them with important business and export enablers such as training platform, trade promoter, financing providers, and many others. Xpora is accessible by 120,000 SMB exporters and almost 10 million businesses within their value chain. We collaborate with various institutions. For example, is SMESCO, a government institution under Ministry of MSME , as well as TaniHub, one of the major agriculture technology startup focusing on small farmers.
Xpora provides network to more than 100 million worldwide customers, supported by BNI extensive international operation and collaboration with trade association and various e-commerce. Xpora also facilitates connection to export enablers from various institution, such as business training and incubation provider, logistic company, government licensing, and many others. Therefore, we believe that Xpora could be a holistic ecosystem solution. A place to go for any domestic entrepreneur who wants to tap into the export market. Xpora model is designed to be customer-centric. We identified SMB exporter pain points and offer solutions to it. Xpora provides SMB incubation center, where we give advisory and assistance on how to tap export market. To do this, we partner with various institution, including with several top universities. We help our clients to reach global business partner and customers by collaborating with e-commerce and institution like Trade Association and BKPM.
We offer bundled financial products with attractive discount for LC, discounting LC, collection, and remittance. Even the loan application process is simplified through digital portal with loan disbursement of less than five days. Beyond lending, Xpora also offers special pricing for trade finance and cash management products. We move quickly to roll out Xpora model to major exporter hubs across Indonesia. To begin with, we open Xpora hubs in seven cities in Sumatra, Java, Bali, and Sulawesi. In each Xpora hubs, we provide dedicated relationship manager to serve the needs of exporter customer. The hub also serves as a coworking space where various entrepreneurs with export ecosystem might sit and exchange ideas, as well as showcasing their products. So far, we receive very positive response with various constructive feedbacks from our customers. Next topic on digital transformation will be delivered by our Director of IT, please, Pak Y.B..
Thank you, Pak Iqbal. Ladies and gentlemen, we have all realized that both fintech and conventional banks have their respective advantages. Unlike fintech, which only have digital platform, as a bank, we have both the platform and our own products. We keep upgrading our platforms. In addition to our existing brick and mortar branches, we develop branchless agent banking in suburban and rural areas as an economical way to distribute our products and services. Development of digital native products and services also be the focus that cover both retail banking, mainly through mobile apps, and wholesale banking, mainly through our BNIdirect, our cash management platform, and also through our open APIs. We will discuss about them in more detail after this.
The market now is entering a new equilibrium, where the fintech is more rational with its marketing and business strategies, and conventional banks and fintechs are becoming more rational to set up collaborations. With these circumstances, a strategy to form a new subsidiary that offers digital propositions is not the only alternative for conventional banks. We feel that forming a new bank or a digital bank subsidiary means building a new ecosystem from scratch that require effort and cost. The other way is to do a partnership or a collaboration based on mutualism with these fintech players to produce an even bigger B2B2C ecosystem. To collaborate with other ecosystems, we develop API since 2018. BNI is a leading bank in terms of API with 283 services. The most compared to our peers. Includes various services such as transfers, transactions, bill payments, global remittance, cash management, et cetera.
Through this API service, BNI optimize all three possible roles. First, as an orchestrator of the ecosystem, where BNI builds an integrated platform that is being used by the ecosystems. For examples, including the BNI Smart City solutions for the government ecosystems, BNI EduPatrol for the education ecosystem, and BNI Xpora for the export of MSME ecosystem. The second, as a partner where BNI optimize the partner system to sell its products, like TapCash top up or digital account opening through our partner's platform. Third one, as a contributor, where we optimize a bundled solutions into a new products. One of the use case is our collaborations to provide pay later features, and we will discuss about this more in detail later. Our goal is to enlarge the customer base on the platform itself by increasing attractiveness and building excellence through quality and service differentiations.
Also by reaching out and collaborating with other digital ecosystems to enlarge the market share of our banking products. BNI's collaborations with digital ecosystem such as GoTo and many other ecosystems drive BNI's revenue. Our cash management platform is one of those who enjoy the benefits. BNI has seen a significant increase in fintech or e-commerce customers in the last three years, reaching 195 fintechs and 74 e-commerce partners who have become our cash management clients as well. In the first semester this year, the number of BNI cash management transactions reached 214 million transactions. Around 61% of it was contributed by our digital clients, notably from virtual accounts, e-collection service.
The contributions of these digital clients to our cash management fee-based income also continues to increase, reaching 74% in June 2021, and its contributions continues to increase from time to time, in line with fintech and e-commerce boom in Indonesia. We became early adopter of pay later business in collaborations with Traveloka and recently Shopee. They are just starting at the end of July. With Traveloka, marketing and credit scoring is performed by partners. But its scoring reliability has been back-tested by BNI, and BNI has determined the Risk Appetite Criteria or RAC, risk acceptance criteria, threshold based on the result of our back-testing. Credit risk for this partnership is on BNI. However, we mitigate the risk by implementing credit insurance. As of July 2021, total portfolio of Traveloka pay later reaches IDR 47 billion.
The quality is good, with NPL at the level of 3.8%, but has been backed by credit insurance. While average net effective interest rate stood high at 21.41%. We just started a collaboration with ShopeePay Later, and we will add more partnership in the future as well. Apart from developing fintech and e-commerce partnership, BNI also continues to develop our mobile banking. The number of our BNI mobile banking customers continue to grow by 57% year-on-year, reaching 9.3 million users. Completeness of features is our competitive advantage over our competitors. The number of transactions made through BNI mobile banking was 109 million in the second quarter of 2021, an increase of 58% compared to the second quarter of 2020. For further improvement, our mobile banking users will have an omni-channel experience, personal finance management, and SME solutions integration.
Besides retail customers, we keep improving our products and services for business banking clients through our digital platform as well. For business banking clients, BNI offers its cash management flagship product called BNIdirect. This is available in both mobile apps and web-based approach. One example of our key features often getting compliment by our clients is integrated taxation management platform within BNIdirect. To facilitate transaction of our wholesale clients, we also develop an integrated portal called BNIDBS.ID, where customers could do various types of transactions such as payment management, collection management, value chain management, and open banking solutions. Number wise, we still see strong momentum for our wholesale cash management platform with 16.4% year-on-year growth in the number of users with a significant 175.6% growth of transaction numbers.
The spike in the number of transaction is due to the increasing contributions of our digital clients, as explained previously. More importantly, the room for growth is still ample as the penetration rate of our clients is only 20.6%. We already explained in details regarding our effort to upgrade our digital offerings to our clients. Ultimately, the question is, what is the impact to us? In this slide, we show that other than fee income, better customer experience in doing transactions ultimately bring sticky CASA which enable us to maintain or even expand our margin. Nowadays, 50.4% of our savings balance come from regular mobile apps users. This percentage is much improved as compared to only 38.4% a year ago. For current account, 92% of it comes from cash management users.
This current account stay with us because of the convenience to do transactions and not sensitive to the interest rate we are offering. As a result, cost of fund for current account is only 1.33% in June 2021 as compared to 2.40% a year ago. Overall, this should help our bank to maintain leadership in low-cost funding. The next presentation is about our financial highlight by our CFO, Ibu Novita Widya Anggraini. Ibu Novi, please go ahead. Thank you.
Thank you, Pak Y.B. Ladies and gentlemen, allow me to explain about our financial highlight. For your information, our first half report has been audited by our auditor, PricewaterhouseCoopers, and we received an unmodified opinion. We managed to grow our loan book by 4.5% year-on-year, higher than industry average. However, we focused the growth mainly from the lower segment, namely top-tier corporate client, subsidized micro loan, and payroll-based loan. On the funding side, we matched the growth in third-party funds with loan growth. As CASA inflow continued to be strong at 11.5% year-on-year, we had room to reduce expensive funding from time deposit by 8.7% year-on-year. Net interest income managed to increase by 18.2% year-on-year, thanks to a 120 basis point reduction in third-party funding costs. That was more than enough to cover the impact of pandemic to loan yield.
Non-interest income grew by 19.2% year-on-year, mainly from trade finance transaction and e-channel. OpEx growth was 12.7% year-on-year, lower than 19.2% growth in revenue. Hence, we delivered a significant positive jaws of 2 percentage point during first half 2021. As a result of strong growth in revenue, our PPOP and net profit grew by 24.4% and 12.8%, respectively. Our strategy to focus on low-cost funding was reflected in CASA ratio at 69.6%, a significant 440 basis point improvement compared to last year. As a result, cost of fund could be reduced to the level of 1.7% and contributed to 4.9% NIM. ROE and ROA were at 10% and 1.5% respectively, keep improving on a year-on-year basis. Loan at risk was at 25.8%, improved by 110 basis point as compared to the previous quarter.
This was contributed by a reduction in both NPL and collectability one restructured loan as some clients start to resume normal business, and no longer need restructuring support from us. NPL ratio finally improved to be below 4% level, and credit cost at 3.5% was in line with our guidance. Our liquidity position was quite good, with LCR at 2.3 x and NSFR at 1.4 x, way higher than regulatory requirement. Loan-to-deposit ratio was maintained at a healthy level of 87.8%. As a result of sub-debt issuance on March this year, and profitability recovery, our total CAR increased to 80.2%. During the pandemic time, we are fine-tuning loan mix composition toward lower-risk portfolio. You could see that loan growth was dominated by corporate segment, subsidized microloan, our KUR, part of small business loan, as well as secure consumer loan.
Loan to private sector corporation grew by 7.9% year-on-year and 1.6% quarter-on-quarter, driven by industry in infrastructure, energy, and real estate sector. Meanwhile, loans to state-owned enterprise was contracting by 8.1% year-on-year, in line with our strategy to disserve more into private sector. In line with our strategy to improve asset quality, we selectively let go some client in medium segment and build new good portfolio. During this process, it resulted in 3.3% portfolio contraction year-on-year. As anticipated, blended loan yield was relatively stable in second quarter 2021. As of June 2021, low-cost funding grew by 11.5% year-on-year and 3.8% quarter-on-quarter. As loan demand hasn't fully picked up, CASA growth alone was enough to meet loan demand. This enabled us to keep improving CASA ratio to 69.6%, the highest level we have seen in the past 10 years.
In second quarter 2021, our cost of fund was only 1.64%, the lowest level we've ever had. We are still seeing room to improve it further as we cut off our CD rate again by 10 basis points starting on August. We will always focus on sustainable growth of low-cost funding. In wholesale, it will be driven by our effort to cross-sell cash management solution to client. In retail, we are going to keep investing in mobile banking feature and reliability. Net interest income grew by 18.2% year-on-year, thanks to our strong CASA franchise that led to successful reduction of cost of fund, and our cost of fund now is the second lowest among Indonesia banks. Non-interest income grew by 19.2% year-on-year and 12% quarter-on-quarter, driven by marketable securities, e-channel fee income, and trade finance business from gradual recovery in global trading activity.
Operating expense grew by 12.7% year-on-year, driven by an increase in personal expense due to accrual of variable remuneration to reward our employee for their collective effort in delivering strong business recovery. On the G&A expense, we remain cost-savvy with flat growth year-on-year. As we delivered 7 percentage point positive jaws between income and OpEx, our PPOP grew strongly by 24.4% year-on-year. The management has intention to build higher provision charges when we have good PPOP in order to minimize profit volatility in the future. Looking from the quarterly trend, provisioning charge start to stabilize, in line with general trend of asset quality improvement. Bottom line increased by 12.8% year-on-year and 7% quarter-on-quarter. Next presentation on asset quality, risk management, and loan restructuring update will be delivered by our Managing Director of Risk Management, Bapak David Pirzada. Please, Pak David.
Thank you, Bu Novita. Ladies and gentlemen, as of June, the outstanding COVID restructured portfolio was IDR 81.8 trillion, or 14.4% of total loans. This amount continued to decline since December last year of IDR 102 trillion and almost 19% of total loans previously. All segments also showed improvement across the board. During second quarter, there was some new restructured loan under corporate segment, mainly from client and general contractor, which we already assigned 21.7% of provisioning coverage. Despite regulatory relaxation where banks are allowed to classify all COVID restructured loans under collectability one, we choose to assign classification as much as possible to reflect the client's underlying situation. By doing this, we also could assign higher loan loss reserve accordingly. Out of all COVID restructured portfolio, 1.8% was already NPL, 8.7% was collectability two, and the remaining was collectability one. Overall asset quality data showed a gradual improvement trend.
Loan at risk was at 25.8% of total portfolio, 110 basis points lower than March position. Now looking into the component of loan at risk one by one, restructured loan collectability one has improved to 16% of total loan from previously 17.3% in March 2021, or around 130 basis points decrease. Collectability two ratio increased by 30 basis points year-on-year. This is triggered mainly by an exposure in trading restaurant, hotel, and business services. For collectability two, we already built 46% provisioning coverage as of June 2021. NPL improved by 20 basis points quarter-on-quarter, to 3.9%. All of these movements have been in line with our expectation. Despite general improvement in loan at risk ratio, we still consistently built higher provision coverage. NPL coverage was at 215.3%, and LAR coverage at 32.9%, which is higher than the previous quarter.
Overall loan loss reserve ratio to total loan has been gradually increasing to 8.5% in June 2021 from previously 6.5% the year before. We assign a conservative provision coverage of 77.2% on average for those in NPL category, which we deem sufficient considering LGD, loss given default rate, of around 60%. For those in collectability two, the provision coverage was 46%, much more conservative than regulatory suggestion. Provision coverage for current restructured loan was 10.5%, as we believe only a small portion of this bucket, or around 12%, is having high risk of downgrade to collectability two. Now I will turn back the presentation to Bu Novita to explain our guidance.
Thank you, David. Based on latest situation in the economy and banking industry, we fine-tune our full year 2021 guidance. Loan growth target is revised to be 5.7%, factoring potential impact from social restriction to loan demand. We believe at this level of growth, we are still growing higher than the industry average. However, the growth will continue to come from the lower risk segment. Net interest margin is revised upward to be 4.7% up to 4.9% to take into account continuing cut in time deposit rate. Cost of credit guidance remain the same at 3.3% up to 3.6%. Since the beginning, we have been very conservative in budgeting for provisioning charges, with ample buffer for the unanticipated development related to the pandemic. Hence, recent social restriction should not change the picture. This is the end of the first half 2021 result presentation.
Next, moderator will coordinate for the Q and A session. Thank you.
Thank you Pak and Ibu for the comprehensive presentation. Ladies and gentlemen, we are now entering Q and A session. Should you have any questions, please send it to our email, ir@bni.co.id. The first question is coming from Weldon Eng from HSBC and Cheryl Chow from CICC Asset Management. Kindly give updates on asset quality, restructured loan, and net interest margin. Mr. David and Mrs. Novita, would you kindly answer these questions? Thank you, Pak, Bu.
Okay. Thank you, Weldon. Asset quality data showed a gradual improvement trend. As of June 2021, total loan at risk was at 25.8% of total portfolio, which is 110 basis points lower than March position. If you look into the component, COVID restructured portfolio was recorded at IDR 81.7 trillion, or equivalent to 14.4% of total loans. This amount continued to decline since December last year, which was around IDR 102 trillion. So there was a decline of IDR 20 trillion in total for six months. We saw that all segments showed improvement across the board. During second quarter, there were some new restructured loan under corporate segment, mainly from particular SOE construction borrower, which we already assigned almost 30% of provisioning coverage. While collectibility 2 ratio increased by 30 basis points quarter-on-quarter, which is triggered mainly by exposure in middle segment, mostly from trading sector.
For collectibility 2, we already increased our loan loss ratio of 46%, or 240 basis points higher quarter-on-quarter. NPL also improved to 3.9%, which is 40 basis points lower year to date and 20 basis points lower quarter-on-quarter. As of June 2021, LAR coverage ratio, including COVID, has reached 32.8%, compared to only 27% in December 2020.
For NIM, initially, we estimated full year 2021 NIM will be between 4.6% and up to 4.8%. As of June 2021, NIM was maintained relatively stable at 4.9%, which was slightly above guidance, thanks to strong CASA franchise that enable us to keep lowering funding costs by 120 basis points year-on-year. Note that our cost of fund right now is the second best among Indonesian banks. We revise up our net interest margin guidance to be 4.7% up to 4.9%. The guidance already takes into account further cut in TD rates on August, as well as conservative assumption of tight loan pricing in the second half of the year.
Thank you, Bu Novita and Pak David. The second question is coming from Agus Pramono, from Aldiracita Sekuritas, and Jovent Muliadi from Indo Premier Sekuritas. What is the impact of current restrictions on communities or PPKM in Indonesia to asset quality so far? Pak David, would you like to explain? Thank you, Pak.
Okay. Thank you, Pak Agus. Thank you, Pak Jovent. Our asset quality was improving right before PPKM or social restriction, as suggested by our asset quality survey in May. We started to have PPKM on July until now. If we look from latest data until first week of August, collectibility 2 ratio was still improved as compared to end of June position. NPL ratio was stable. We are still keeping monitoring the situation. What we need to do within our control is to keep being prudent in term of loan disbursement to low-risk segment, and building enough loan loss reserve as what we did on June.
We have also anticipated the impact of this PPKM because we saw that there is some indications in small segment and also consumer segment, that the impact of PPKM will deteriorate somewhat to the quality of the debtors in this segment. We have been communicating intensively with all of these debtors, and we will be able also to support them, whether they need another restructuring, and we will do if necessary. Thank you, Pak Agus, Pak Jovent.
Many thanks, Pak David. The third question comes from Robertus Hardy from Henan Putihrai Sekuritas, asking for guidance on second half 2021 provision expense. Ibu Novita, we would be glad to hear from you, Bu, thank you.
Thank you. Thank you, Pak Robertus Hardy. We do not change this year's cost of credit guidance of 3.3% up to 3.6%. Since the beginning, we have been very conservative in budgeting for provisioning charges with ample buffer for unanticipated development related to the pandemic. Hence, recent social restriction should not change the picture. From our bank only five-month result that we publish in our website every month, you might have noticed that our year-to-date credit cost until May was only 3.3%, or at the low end of our guidance. This was validated by continued improvement in asset quality, as suggested by our third survey on our debtor conducted on May. However, entering June, we started to see the emergence of Delta variant across Indonesia.
As a result, we conservatively front-load credit costs into June, so that month to date June was cost of credit jumped to 4.5%, bringing our first half cost of credit to 3.5%, or close to upper range the full year guidance. We want to reiterate that our month to date June for monthly cost of credit in second half, we do not change our full year guidance for cost of credit. We believe this is the right thing to do during this highly uncertain environment, and it should minimize risk of sudden jump in second credit costs. Thank you, moderator.
Thank you, Bu Novita. The fourth question is coming from Gui Xin Lin from Prudence Asset Management, and Johannes Prasetya from BCA Sekuritas. What are your expectations on non-performing loan after restructuring scheme ends after end 2022? We would like to invite Pak David to deliver this question. Thank you, Pak.
Okay. Thank you, Gui Xin. Thank you, Johannes. To get a holistic view of our loan portfolio, we have carried out asset quality assessment three times already. The latest was done in May 2021. Overall, we see an improvement in the customer risk profile, with high-risk classification decline from previously 12% to 7%, while low-risk classification increased from 50% to 62% of the total portfolio being assessed. From the last survey, we also identified around IDR 17 trillion loan book, which we considered as high risk shadow NPL, out of which around IDR 10 trillion would be downgraded this year, and the remaining IDR 7 trillion downgraded in next year. If we net off the gross NPL formation with write-off, upgrades, and repayments, we expect NPL ratio this year will be below 4%. And we also expect that next year it will continue to decline.
And also, we believe the termination of COVID restructuring relaxation will not result in surging NPL because we do not fully take advantage of the relaxation. Despite regulatory relaxation, where banks are allowed to classify all COVID restructured loan under collectibility 1, we choose to assign classification as much as possible to reflect the client's underlying situation. By doing this, we also could assign higher loan loss reserve accordingly. Out of all COVID-restructured portfolio, 1.8% was already NPL, and 8.7% was already in collectibility 2. Thank you, Gui Xin.
Thank you, Pak David. Our fifth question comes from Dela Agata from Syailendra Capital, and Lim Rui Wen from DBS. Asking for 2022 estimated cost of credit. Are you going to keep being conservative in order to build up higher loan at risk coverage, and anticipating more deterioration from the relaxation of POJK 11? Ibu Novita, would you kindly clarify this to us? Thank you, Bu.
Thank you, Dela. This year should be the last year we book a high CoC level, and we expect a significant improvement on 2022 onward, assuming general economic condition is stabilizing. So far, we continue to see gradual asset quality improvement as shown by our loan at risk trend, as well as the progressive result of our regular asset quality survey. We do not expect the termination of restructuring relaxation under POJK 11 will materially impact our loan at risk, as we always classify the client according to their underlying situation to the best of our knowledge. That's why we have been doing asset quality survey three times so far. We are comfortable with our current level of loan at risk coverage, which is also in line with our peer. We will continue to maintain it within current range. Thank you, Dela.
Thank you, Ibu Novita, for the response. Our sixth question is coming from Lim Rui Wen, DBS. Loan growth outlook for second half 2021 and 2022. Ibu Novita, would you please answer this question? Thank you, Bu.
Thank you, Lim. Our initial guidance of loan growth was 6% up to 9%. As of June 2021, we still manage loan growth at 4.5% year-on-year, higher than industry at 0.4% year-on-year. Compared to the industry, as of June 2021, we have marginally better growth opportunity. We managed to have positive momentum in corporate banking, where we are able to tap into a lot of new-to-bank top industry player. Our payroll-based loan is start from low base with a lot of untapped internal customer. Year-on-year, it grew by 19.6%. We are getting more involved with KUR, targeting to channel IDR 32 trillion this year, about 50% higher year-on-year.
For next year, considering the recent development, management team decided to slightly revise this year loan growth to be more conservative from 6% up to 9%, to be 5% up to 7%, factoring potential impact from social restriction to loan demand. We believe at this level of growth, we are still growing higher than industry average. However, the growth will continue to come from a lower risk segment. For the next year, what we can say now is management team will always focus on long-term sustainable profit. We are going to keep monitoring the progress of economic recovery, and will always be flexible in fine-tuning between growth and margin and asset quality. Thank you.
Thank you, Ibu Novita, for the clear answer. The next question is coming from Ahmad Nur Cahyadi, UOB Kay Hian. How much is the current restructured loan that estimates to be NPL in the end of 2021, and how much is categorized as high risk? Pak David, would you please answer this question? Thank you, Pak.
Okay. Thank you. If we see or if we refer to our previous survey and assessment which we did in May 2021, out of the total restructured COVID portfolio, around IDR 82 trillion, only around 7% of that is under high risk. This has been also a decline from the December 2020. In terms of amount, around IDR 7.8 trillion of our restructured COVID portfolio is under high risk. From this, we did not really expect all of them to go into NPL or downgraded into NPL this year. Because we have also seen that actually, our NPL or the restructured COVID loan that downgraded to NPL is actually only around 1.8% or 2% in the past six months.
Overall, including the restructured non-COVID, we have already projected that around IDR 10 trillion in total will be downgraded into NPL, which we already also mentioned that with the write-offs, with the payments, and also with the upgrades, then we will be able still to maintain the NPL ratio less than 4%. Thank you.
Thank you, Pak David. Ladies and gentlemen, as we have come to the end of our analyst meeting, we do hope to have been delivering our bank first half 2021 financial result completely to all participants. For the questions that have not been answered, will be followed up by IR team. Also, if there are any further questions, kindly send an email to ir@bni.co.id. We would like to thank you for participating in today's session. The participants may now leave the webinar room.