Before we start, a few housekeeping notes to all of you. For those on the Zoom call, please download all presentation materials from the BRI presentations homepage on the link we sent this morning. During the Q&A session, kindly submit your question via the chat box along with your name and company. We will select the questions to answer. Additionally, we will also call on some analysts to unmute and ask the question directly. Now, I would like to invite Hery Gunardi, our Group CEO, to begin the meeting. Please, sir.
Thank you, Siaga. Very good morning, everyone. Let me continue the presentation. Before we discuss our result, I would like to give you some color on the current update on the macroeconomic condition in Indonesia. Indonesia's economic growth remains challenging. Purchasing power continues to face pressure, validated by the BRIMS MEA index that shows a declining trend since the end of 2024, particularly in the lower-income segment. However, inflation has remained relatively stable in 2025, where it was 1.87% year-on-year in June 2025, within Bank Indonesia's target range, driven by controlled food and energy prices. In terms of government spending, it is expected to accelerate in the second half of 2025, mainly through social assistance, MSME support, and also other fiscal programs to boost domestic demand. While we maintain a conservative stance amid global uncertainty, the fiscal tailwind offers selective growth opportunities.
BRI has been supporting key national programs such as KUR, ultra-micro financing, pre-nutrition meal, village cooperative, and also upcoming housing programs. As the largest microfinance institution in Indonesia, BRI continues to balance social mandate with commercial viability by embedding risk-based pricing, strengthening underwriting processes, and also digitalizing services. This approach ensures that while we expand access to underserved communities, we also maintain asset quality and also long-term profitability, delivering both social values and also sustainable economic return. First of all, we would like to move into the liquidity and monetary conditions. Recent improvements in liquidity supported by Rupiah stability and Central Bank Bank Indonesia's gradual rate cut. Benchmark rate currently at 5.25% compared to U.S. stat rate at 4.5%. Rate cut reflects a growth stance of Bank Indonesia to support the banking sector. Decline in SRBI issuance and also the yield signaling reduced liquidity absorption by the central bank.
In terms of the fiscal stimulus outlook, the government spending is projected to rise sharply in the second half of 2025, with a target of 97% for the full year compared to the 39% budget realization as of June 2025. Increased fiscal spending is expected to support domestic demand and also stimulate economic momentum. Banking industry performance, if you look at the asset growth, remains moderate in line with the slower loan expansion. As banks adopted more selective lending amid ongoing macroeconomic uncertainty, loan growth stood at 8.9% year-on-year, reflecting continuous credit strategies and also still subdued MMSA demand. In terms of deposit growth, it achieved 4.5% year-on-year, led by 6.05% growth in savings accounts, while demand and time deposits were flat. Deposit growth may accelerate in the second half of 2025, supported by rising government spending and also seasonal inflow.
LDR stood at 85.9%, still below the line, indicating the balanced funding and also lending dynamic. In terms of net interest margin, it was 4.5% in April, lower year-on-year due to first rate hike. However, NIM has begun to improve sequentially, driven by better funding costs and also improving liquidity conditions. CAR stayed robust at 25.4%, comfortably above regulatory minimum, reflecting solid capital buffers. Please note that we started to see liquidity improve in the second quarter of 2025, supported by stable deposit growth, 5.3% average in the quarter two and quarter one and quarter two. In June 2025, deposits spiked to 6.9% driven by government stimulus and also fund placement, creating strong funding-based position bank well for the second half of 2025. As you may be aware, the new management has two main focus going forward.
In the first three months, we have been starting some initiatives to ensure the discipline of execution on the ground. We also established five strategic PMO focused on lending, funding, distribution and operation, government program, and also human capital. To enhance the regional and also brand oversight, we are centralizing and also streamlining operations under the Network and Retail Funding Director, positioning regional offices and branches as the core engine of the retail funding growth. We also boosted the results channel productivity by optimizing business merchant and also key QRIS performance amid reducing funding outflow to other banks and strengthening BRI transaction banking ecosystem. We strengthen micro-segment operations by developing additional supervisors and also two micro-units. We are on the way to remodeling the role of loan officers and enhancing underwriting quality through improved risk screening, risk-based approval limits by unit grading, and also more structured loan pipeline process.
As part of our second transformation pillar, we are revamping our core microbusiness by strengthening operations by adding micro-unit supervisors, redesigning loan officers' roles, and also improving underwriting and pipeline quality. At the same time, we are building the new core. We call it the new engine by accelerating consumer loan through payroll loan, targeting new customers in private sectors, and growing mortgages market share by acquiring tier one and tier two developers, which is giving the more quality in terms of the credit risk and expanding also the commercial loan in priority sectors like education, healthcare sectors, state budget program, and also the potential sectors across the region. We would like to report the initiative in retail funding, transforming funding franchise. We revitalize key merchant ecosystems through targeted activation programs at high-traffic F&B hotspots.
For example, in Jakarta, we have quite many numbers of places that are very hectic in the food and beverage restaurants, for example, in Senopati Street, Gunawarman, Walter Momon City, Pantai Indah Kapuk Dua, and Extra. We are also going forward to Bandung, Denpasar, and also different areas that give other programs high traffic for F&B as well. Intimate engagement events with the top merchants across BRI regional offices. We push this one more effectively with the regional CEO. The campaign aligns with the emerging lifestyle trends. This effort aims to deepen merchant relationships and also increase the transactional CASA. We also strengthen the capabilities of the RM relationship managers with targeted upskilling while enforcing discipline execution to the brand level. Collaboration between business units and also the subsidiaries to leverage shared customer ecosystems, bandwidth offerings, and also coordinate the campaign.
In terms of the initiative in the asset quality, we also revamped also the human capital. We raised the recruitment standards, reskilling, upskilling loan officers, and also enabled multi-role capabilities. Business process improvement, for example, we deploy unit supervisors in the micro-unit and hands-on support, and also the pipeline management, centralizing monitoring. Strengthening risk management, strengthening the risk screening with the sector, regional risk profile, and also increment dynamic approval limits. While it is still early. We are starting to see encouraging signs of improvement in our retail transaction performance. First of all, we continue that we have been tracking the performance of digital channels, for example, such as BRIMO, business merchants, and also QRIS to drive retail CASA growth. With BRIMO, for example, numbers of users increased by 21.2% year-on-year, reaching 42.7 million.
More importantly, we see improvement in monthly active users, or MAU, from 15.6 million to 19.3 million, increased by 24% year-on-year. Financial transactions with BRIMO also increased by 26.4% year-on-year, and transaction value grew by 25.5% year-on-year. How about the business merchants and QRIS? The number of all business merchants reached 306,000. In terms of the numbers, it's a little bit declined by 21.7% year-on-year, but we are on the way to optimizing our merchant outlet. The numbers of private business merchants increased by 14.3% year-on-year, while sales volume per merchant grew by 62.5%, reflecting high usability, security assurance, and also has become the key driver for broader business merchant transaction adoption. For our QRIS, sales volume also increased by 142.9% year-on-year, and the numbers of transactions grew by 162.5% year-on-year.
I think our initiative to grow retail transactions has supported a manageable cost of deposit and also driven by higher growth in retail CASA. The next one, the next slide. Not only the leading indicators, but we start to see gradual improvement in our funding needs. You can see in the slide and in the screen, in terms of total deposit, it grew 6.7% year-on-year in the first half of 2025, supported by strong 10.6% year-on-year in CASA growth. CASA ratio remained high at 65.5%, well above historical levels. Q2Q, quarter-to-quarter deposit growth was robust, driven by a 2.4% increase in savings accounts, signaling a recovery in savings behavior. Savings accounts with balance of over Rp500 million grew 11.5% quarter-to-quarter, rising their share from 21.1% to 23%, supported by the strategy to optimize CASA through retail activity and also match up emerging or emerging affluent customers' best expenses.
Looking forward, we remain optimistic about funding costs, not only because of continuous efforts to revamp our funding franchise, but also Bank Indonesia's stance to maintain ample liquidity in the system. The next slide. From the asset side, the portfolio shifting from micro to consumer, corporate, and also commercial segments had a limited impact on the profitability, as reflected in resilience in terms of net interest margin or NIM. This was supported by improvements in our funding structure, driven by strong CASA growth at 10.6% year-on-year, which reduced our cost of funds by 5.6% year-on-year. At the same time, robust yields were maintained, supported by the increased contribution from our subsidiaries company, which is PNM and also Pegadaian, within the micro segment. This balanced approach has enabled us to sustain and establish NIM at 7.676%.
Despite the shift in terms of the portfolio composition, as of June 2025, we are able to book a moderate growth in terms of balance sheet. Total assets grew 6.5% year-on-year, supported by 6% loan growth, with a more favorable liquidity situation expected in the second half of 2025. Deposits also grew 6.7% year-on-year, supported by 10.6% year-on-year increase in CASA, both current accounts and especially savings accounts. Quarter-to-quarter improved in the quarter two, with current accounts growing by 5.8% in quarter two compared to 4.6% in quarter one, while savings grew by 2.4% in the quarter two, a notable recovery from minus 0.2% contraction in the quarter one. We do hope that we will continue to improve going forward as well as we want to transform our retail funding franchise.
In terms of fee and other operational income, it grew 10.4% year-on-year, supported by an increase in the gold sales and also recovery income is lagging since we had a few working days in the first half of 2025. We expect that the growth will accelerate in the second half of 2025, not only because we have more working days, but we also already set a dedicated team on collection and recovery from micro and small from headquarters office until the BRI unit. From a profitability perspective, we are still in the progress to improve our asset quality, especially in micro and small segments. Our PPOP still grew positively around 2.2%. This is a positive signal because the PPOP is already positive, driven by net interest income positive growth at 2.8% year-on-year, and manageable FX grew only 5.7% year-on-year. We still booked negative growth in net profit around 11.2% year-on-year.
Please note that in June 2024, we had one-off non-loan provisions reversal of around IDR 4.2 trillion. 4 trillion due to construction SRA restructuring scheme. I think this is my last slide. Keep tracking as expected as we remain in a better resolution phase. We are going ongoing loan quality improvement reflected by declining LAR and also SML. While profitability metrics had been and also core earnings remained stable, supported by strong retail funding growth and also increased contribution from Pegadaian. Reported NIM was 7.76%. First half of 2025, increased 16.6% to 7.76% quarter to quarter, supported by stronger loan yield as in increased 35.6% quarter to quarter and also manageable cost of fund. LAR declining 31% quarter to quarter, and LAR coverage was at 53.17%.
Cost to income ratio slightly increased quarter to quarter to 41.9% from 41.1% preliminary due to declining net premium income as there was higher insurance reserve in the second quarter of 2025. Cost of credit was 3.40%. First half of 2025. Furthermore, the gross NPL ratio improved year-on-year to 3.04%. Now I would like to turn the call to Ibu Vivi, our CFO, to discuss on financial more detail. Please, Ibu Vivi.
Thank you, Pak Hery. Good morning, everyone. I would like to start with our balance sheet as of June 2025. The total loan grew around 6%. Total asset grew around 6.5% year-on-year, supported by our earning asset, basically, that grew 1.9% year-on-year. The compositions of earning asset to total asset increased to 94% compared to 92.5% in a year-ago period.
The main contributors of earning assets still coming from the loan that grew around 6%, 5.97% year-on-year, or if we break it down into quarter to quarter, is 3.1% quarter on quarter. If you recall, our first quarter grew is only 1.4% quarter on quarter. Contribution actually coming from the subsidiaries. The contributions of loan coming from Pegadaian and PNM increased from 9.4% to 10.7% year-on-year. Quarter on quarter, Pegadaian grew 9.21%, increased from 8.8% in the first quarter, while Bank Only actually quarter on quarter increased by 2.94% compared to 0.86% in the first quarter of 2025. The source of growth in a Bank Only level for loan actually coming from corporate and also consumer. For consumer, it is coming mostly from payroll loan and also subsidized mortgage.
For corporate clients, it's basically coming from the corporate borrowers that are already being approved previously, and now they are using their loan, and most of them are tier one clients. Still talking about the loan growth in Rakyat, micro loan grew 1.6% year-on-year, supported by Pegadaian that grew 31% year-on-year. The main growth from Pegadaian is coming from the bond lending that grew 40% year-on-year. At the same time, in a Bank Only level, our micro segment only grew minus 3.29% year-on-year due to the weakening demand in the grassroots. On another side, from the liability side, our third-party fund grew 6.7% year-on-year. Our Q-on-Q, actually, we grew 4.3% in the second quarter of 2025, supported by CASA that previously mentioned by Pak Hery that grew 10.6% or 3.8% Q-on-Q. Especially the growth coming from the savings account that Q-on-Q grew 2.4% versus minus 0.2% in the first quarter.
The driver of the savings account coming from the retail segment, basically, that grew 4.2% Q-on-Q. The savings from the grassroots economy actually still growing, but still like in a very low number, around 1.2% Q-on-Q. The savings account that we got from retail segment, driven by the emerging affluent or mass affluent, like Pak Hery mentioned previously, we try in the last three months, we try to minimize leakage of funds to other banks. This is basically helping our existing customer savings account balance to increase. We also recognize new funds that we acquire from other banks due to the improving merchant businesses. If we are talking about our P&L or profitability as of June 2025, our interest income grew around 3.6% year-on-year, and I think supported by the contributions from Pegadaian. Pegadaian contributions in interest income actually improved from 10.27% to 12.77% year-on-year.
Within the interest income, actually, we have one of reverse mod loss due to the write-off in a corporate loan around 390 basis points. We also have reclassifications, the SME insurance around IDR 230 billion. The reverse mod loss is IDR 390 billion, and the reclass of SME insurance is IDR 230 billion. If we take into account this one, our net interest margin from 7.76% down to 7.69%, still quite resilient at the moment. The interest expense in Rakyat grew 2.1% year-on-year, and Q-on-Q basically improved 8.1% from bank-only level, and also the subsidiaries still impacted by the liquidity conditions in the second quarter. Also, one of our subsidiaries, in this case, is Pegadaian. The cost of fund is increased to finance their higher loan growth. The cost of fund of Pegadaian increased from 6% to 6.3%. Here we have a net premium.
Net premium income and insurance services that year-on-year basically grew minus 70%. This is due to the implementations of PSAK 117 or IFRS 17, replacing the IFRS 14. The idea of the new implementations is to recognize its accounting treatment, basically to recognize the premium based on the tenor instead of you book all of the premium in one time upfront, but it will be booked recognizing according in every year, accrue every year. Previously, this IFRS 14, actually, when we book the promotions related to the insurance product, for example, they will be booked under OpEx, but now, according to the new IFRS, it will be booked under the insurance services. That is why you see that the growth in this item basically is declining around 70% year-on-year. Moving into our OpEx.
Our OpEx as of June 2025 basically growing 5.7% year-on-year, or around 4.93% Q-on-Q, up from around minus 4.6% if we compare Q-on-Q in the first quarter of 2025. The increase basically coming from the subsidiaries' contributions, Pegadaian and PNM. The contributions from OpEx for coming from Pegadaian and PNM increased from 11.1% to 24%, basically. To be more specific, this is basically related to the increase in the personnel OpEx in Pegadaian because they make a reserve for incentives and salary and bonuses. After considering the OpEx, the pre-provisions operating profit still grew positively, roughly around 2.2% as of June 2025. Moving to the provisions expenses. Can we go back to the previous slide, the P&L slide, please? The provision expenses, if we look at here, the total provision expenses basically grew 25.8%.
If we break it down into loan and non-loan, loan still growing moderate, roughly close to 4%. You see the non-loan provisions basically down very significant from IDR 4.2 trillion a year ago, now it's only IDR 287 billion. This is the normal non-loan provisions basically for Rakyat. That is why the net profit grew minus 11.2% year-on-year, or quarter-on-quarter basically is minus 7.8%, or slightly better if you compare with the first quarter where our net profit basically minus 9.4%. Moving to the liquidity conditions. In the first quarter, our loan-to-deposit ratio basically still manageable, roughly around 85%. It is still below our appetite. Basically, Rakyat might still accept the loan-to-deposit ratio 90 to 92%. The other indicators that reflecting our liquidity condition is the liquidity coverage ratio, still way above the regulations, around 100%, where we maintain around 150%.
Manageable liquidity conditions basically helps us to manage the cost on deposit, where basically Q on Q is flat, around 3%. If we are talking about the marginal, marginal is the May to June cost of deposit, it's continued to decrease. Move to our earning asset, NIM, lending yield, and cost of fund. Our consolidated net interest margin, roughly around 7.76% in the first half of 2025, despite a challenging liquidity environment and pressure on micro loan. While the micro loan compositions declined to 44.7%, Pegadaian and PNM shares within consolidated micro loan increased significantly. It helps to raise micro loan yield basically by 5 basis points to 17.9% in the first half. If we are talking about other operating income and also operating expenses, fee and commissions actually rose 2.7% year-on-year, with recovery income contributing 36% of bank-only non-interest income.
Notably, the net gold fee income surged to roughly around IDR 800 billion from IDR 200 billion year-on-year, driven by Pegadaian robust performance. For the recovery income, actually, if we see the year-on-year, is still flat, is around 1%. This is due to several reasons. The first one is less working days in the first half, so we are expecting an accelerated pace in the second half for recovery. From this recovery, around 42% coming from claim, and the rest is coming from non-claim or based on our efforts to collect the money from our customers. I think that's the overall presentations from financial perspective. Next, I will turn the presentations over to our Director of Risk, Pak Mucharom, to discuss our asset quality.
Thank you, Bu Fifi. I will continue the presentation talking about loan quality.
Our consolidated non-performing loan ratio decreased slightly by 1 basis point year-on-year to 3.04%. Supported by corporate segment, which declined by 146 basis points. This was largely due to the write-off of several borrowers in the textile industry, totaling approximately IDR 2.6 trillion in the first half of 2025. However, we continue to see our pressure on NPLs in the micro segment as we progress further into the 2023 COVID-19 loan cycle. This particular batch contributed around 35. 5% of total micro gross downgrades in the first half of 2025. We expect micro NPLs to remain innovative in the near term. On a positive note, we are starting to see early signs of improvement, as micro SML declined by 11 basis points year-on-year. Overall, our SML ratio has improved to 5.15% from 5.41% year-on-year, driven by a 1.1% year-on-year reduction in BRI bank-only SML volume.
This improvement was partially offset by an increase in write-offs, which rose 10% to IDR 23.3 trillion. Our loan provisions totaled IDR 81.4 trillion, equivalent to 5.7% of total loans. For context, between 2015 to 2019, prior to the pandemic, our loan loss reserve ratio never exceeded 4.4%. As credit conditions normalize, we expect this ratio to gradually return closer to the pre-pandemic levels. Our NPL coverage ratio, which peaked in 2022, has continued to normalize and now stands at 188.8%. We anticipate this ratio to remain within the 170% to 200% range throughout 2025. Our loan at risk declined to 10.8% as of the first half of 2025, continuing the downward trend observed since December 2024. The improvement reflects some stabilization in SML formation, particularly in newer cooperative loan batches within the micro segment.
That said, we remain cautious on asset quality, particularly in the micro and small segments, which could lead to potential NPL volatility. In line with this cautious stance, we are maintaining a conservative approach with loan at risk coverage at 53.17% as of the first half of 2025. Our cost of credit stood at 3.4% in the first half of 2025. The elevated level was mainly driven by continued management overlay, which remained above IDR 2 trillion and contributed around 24 basis points. This overlay is primarily allocated to support the restructuring of the 2023 cooperative portfolio, reflecting our prudent approach to managing residual risk in the micro segment. On a quarter-on-quarter basis, in the second quarter of this year, provision cost declined by 3.98% compared to the first quarter of 2025, supported by improved asset quality in micro.
Our credit cost in this segment fell by 46 basis points, in line with an 18.1% quarter-on-quarter reduction in the net NPL downgrades. However, the 2023 cooperative batch continues to be the largest contributor to NPL downgrades, accounting for 35.5% of the total in the first half of 2025. We remain focused on resolving this portfolio through proactive restructuring, strengthening risk control, and tighter underwriting going forward. Our net cost of credit declined by 27 basis points quarter-on-quarter to 1.8% in the second quarter this year, supported by higher recoveries, which rose 4.8% quarter-on-quarter. We anticipate this positive trend in recoveries to continue into the second half of this year.
We write off around IDR 23.3 trillion in the first half of this year, slightly exceeding our full-year annualized target, with IDR 5 trillion written off in June alone, which was primarily driven by micro, alongside around IDR 1.8 trillion write-off in the corporate segment from a fully reserved textile borrower. In parallel, we are strengthening our risk management through transformation aligned with industry best practices. Key initiatives include segment-focused risk organization, more agile and prudent processes, enhanced data analytics for proactive risk response, and consistent adoption of risk-based decision-making across all levels. With that, I'd like to turn the presentation over to our Director of Micro, Pak Ahmad, to share more on ultra micro and micro business segments. Please, Pak Ahmad. Thank you.
Thank you, Pak Mucharom.
This slide shows us that PNM and Pegadaian's contribution to consolidated micro loans rose to 24.1% in the first half of 2025, up from 20.3% last year, as Bu Fifi stated previously. Pegadaian led the growth with 31.8% year-on-year increase, driven by 38.6% year-on-year rise in gold backbone lending. In contrast, PNM's growth slowed to 2.9% year-on-year as we took a more cautious stance due to its higher cost of credit. This shift in portfolio mix within consolidated micro supported stable micro yields at 18% and boosted their contribution to consolidated NEE to 21.4% from 19% a year ago. Pegadaian continues to leverage various networks to expand gold savings and bond services, while also growing its bullion banking business, now holding nearly 13.8 tons in gold savings and 2.9 tons in custodian storage.
Stronger global gold prices, driven by geopolitical risks and demand for inflation-hedging assets, have fueled customer demand for gold-linked products, providing a strong tailwind for Pegadaian's growth. Meanwhile, we are deliberately slowing lending at PNM, where cost of credit remains elevated at 4.3% versus 1.6% at Pegadaian. Next slide. We see that micro loan growth declined by 3.3% year-on-year in the first half of 2025, as we deliberately shifted focus from volume to asset quality, collections, and funding. This included tightening underwriting standards, adjusting loan officers' KPIs, and streamlining risk and operation across the micro segment. The only growing segment within micro at the bank-only level is CORE, which rose 2.4% year-on-year. CORE is expected to remain the primary disbursement driver until 2026, while growth in cooperatives will likely remain muted due to ongoing cleanup of the 2023 batch and legacy COVID restructure loans.
Nonetheless, we see promising potential in micro Briguna or payroll loans, with disbursements rising 9.1% quarter-on-quarter. Our strategy focuses on increasing payroll penetration and improving loan officers' productivity to drive growth. Borrowers' payroll loan officer decreased to 482 from a peak of 528 in 2022, in line with our effort to strengthen customer relationships and enable better service as we expand digital capabilities. Loans per officer remain steady at 18 billion rupiahs, with productivity expected to increase as we execute on our micro transformation agenda. We are currently conducting a holistic review of the micro portfolio, incorporating input from risk, operation, and network directorates to enhance processes, mitigate risk, and integrate rural and urban strategies through digitalization. To support sustainable long-term growth, we are focusing on three key areas. The first area is human capital.
We are revamping capabilities through reskilling, retraining, and redesigning recruitment and career progression, and remodeling micro loan officer roles. We are also adding supervisors at all micro units to reduce operational burden on branch managers, allowing them to focus more on client relationships. The second area is in business process. We improve end-to-end business process and centralize business performance monitoring. The third area is risk. We are enhancing credit scoring models and also loan underwriting processes. Next slide. As of June 2025, we see that 54.5 trillion rupiahs from the 2023 cooperative disbursements remains on our balance sheet, while 8.7 trillion rupiahs has been written off and 138.4 trillion rupiahs has been paid off. Of the remaining 2023 disbursements, 18.9% are in special mention loan, 11.6% in non-performing loan, and 16% have been written off. 7% has been restructured. We are seeing that 2024 cooperative advantages are looking better.
Of course, we are still monitoring the portfolio until it has all fully seasoned. Now, I would like to turn the presentation back to Siaga to organize the question and answer segment. Thank you.
Thank you, Pak Ahmad. Now, I would split the questions into two. The first one is, I'd like to read the chat box, the question from chat box. The first one came from Gaurav. The question is, the first one is, what led to losses in insurance income quarter-on-quarter? The second is, was there a related modification loss taken in the second quarter? If not, when do we plan to take those? The third, where is the strong current account deposit growth coming from? What are the latest current account rates that you are offering? The last one is, what was second quarter considered exit NIM? We are attending the two four questions, right?
The first, maybe Bu Fifi will start the first question and related to the insurance, yeah?
Thank you, Pak Dirut. Hi, Gaurav. Thank you for the questions. Like I explained previously, this is related to the implementation of IFRS 17, replacing IFRS 14. It happens in BRI Life and BRI Insurance. Basically, this is to recognize the premium more equally along with the insurance contract. Also, the recognition of the OpEx. Previously in OpEx, and now they have to move up into the insurance services line item. Even though the premium, the net premium and insurance services, kind of declining, on the other hand, the OpEx is impacting on the impact the same way. The impact to the bottom line actually is very, very minimum, around 20 basis points lower in PPOP. Thank you.
I think move to the Krakatau, ya, Bu Fifi, ya.
You can continue to answer the questions.
T he Krakatau still restructuration program has, I think, is still not happening in the second quarter, and I don't know if they will be executed in the third quarter. One of the mandates, basically, is they want to effectively implement the restructuring program this year, but after the transfer of shares to Danantara, I think Danantara would like to review. At this moment, I think the best case probably in the fourth quarter of 2024.
What is the number three question?
Welcome back.
Where is the strong current account deposit growth coming from? What are the latest CASA rate you are offering? Let me take the. To respond to the questions, yeah. Basically, the strong current account deposit growth is coming from both, yeah. Not only from the wholesale side, but also from the retail side.
From the wholesale side, we grow is around 20% year-on-year, and the retail side, we grow about 3.2% year-on-year. For the cost of current account in June 2025, it's around 3.65%, or decline around 6 basis points year-to-date compared to December 2024. The last question is, okay, maybe Bu Fifi can take the consolidated net interest margin.
Yeah. The exit quarterly NIM as of second quarter 2024 is around 7.84%. It's slightly higher than the first quarter. Like I mentioned previously, there are several aspects that are impacting the quarterly net interest margin. The reverse modification loss coming from the corporate segment, roughly around 390 billion rupiah, and then reclassifications of SME insurance premium, roughly around 230 billion rupiah, and both basically impacting roughly around 10 to 14 basis points to the second-year net interest margin.
Therefore, if we exclude this one-off, the second quarter NIM will be roughly around 7.7%. Thank you. Thank you, Pak Heri, Bu Fifi.
The next question, still in the chat box, came from Ferry Wijaya. The first question is, could you please highlight the guidance for 2025? The second one, question regarding the KUR and Koperasi Desa Merah Putih or Red and White Village Cooperatives. Can you elaborate subsidy scheme and how are you going to execute this?
Pak Dirut, thank you. Bu Fifi maybe can answer the question. The guidance, yeah.
Yes. Thank you, Pak Heri. Thank you, Pak Ferry, for the questions. If we are looking at our guidance that we gave you previously, I will start with the loan growth. The loan growth guidance is like 7% to 9%. As of June, our loan growth is around 5.97%.
I think if we are looking at the current macroeconomic conditions, rakyat will continue cautiously monitoring the purchasing power and also the demand from our core segment, in this case, is micro and SME customers. I think if we are looking at the current guidance, probably we might end up on the lower end of the guidance or slightly lower. The second guidance is on the net interest margin. We guide you with 7.3% until 7.7%. I feel the guidance will stay because we are expecting better liquidity in the second half of this year and will try to push our cost of fund lower from the current level that we have. We also expect that the contributions from Pegadaian, especially from the bond lending, also continue to improve, minimizing the impact in the loan yield. The next guidance is on the non-performing loan.
I think for this one, like previously explained by Pak Ahmad, the Director of Micro Businesses, the net downgrade to NPL basically is still elevated. In this case, our NPL guidance probably will reach roughly around 3% or slightly higher. Due to, again, the macroeconomic condition, I have to admit that this is impacting our efforts specifically on resolving the bad debt and also restructuring the loan. It might impact the NPL slightly. For the cost of credit, the current guidance is 3% until 3.2% at the moment. Looking at the current progress, especially in our micro and segment asset quality, we might end up in a slightly higher end of our guidance or slightly higher, actually. Please note that there are several assumptions when we use the guidance 3% until 3.2%. It might end up slightly higher, for example, if the loan growth is lower.
For example, if our loan growth is lower by 1%, the impact to the COC will be roughly around 1 to 3 basis points lower. The modification loss from Krakatau still, if that's not happened in this year, that might also impact the COC 7 to 8 basis points. The last one, actually, if the macroeconomic condition actually is still not favorable enough for our micro and small customers and the net downgrade to NPL continues at the current level, the current level of monthly net downgrade to micro is 2.4 trillion. Assuming if these conditions remain until the end of 2025, it might impact 12 basis points until 14 basis points to our COC. That's why our COC might end up in the higher end or slightly higher. Thank you, Pak.
Thank you, Bu Fifi. We have the second question, right? Exactly.
This is about the KUR and also the KDK, Koperasi Desa Merah Putih. Maybe Pak Agus is much more involved in these government projects. You would like to, Pak Agus, to respond to the question?
Okay, thank you, Pak Hery. Thank you for the question first about the KUR. As you know, this is intended to support the business sectors of the micro segment. We see that this program will still be continued next year. Yeah, I think the amount, the quota for BRI this year is IDR 175 trillion. Maybe it will be the same. We are trying to ask the government, the Minister of Finance, to increase the subsidies because, according to our overheads, overhead costs, it's really high. We are trying to discuss this with the Minister of Finance, whether they can add the subsidies for this KUR.
Also, for the KUR, we are still waiting for the FSA or government related to the stream-based housing. We will use such a KUR program, but still waiting for that because the quota is in the government, so we are waiting for that. The second one is about the Village Cooperative program. The scheme is financing the Village Cooperative, yeah, but the liquidity will be provided by the Minister of Finance. Several days ago, there's already launched the Minister of Finance Rules Number 49, 2025, about the financing of this Koperasi Desa Merah Putih. In this project, BRI also is asked to finance this Village Cooperative to be provided by the government. The rate will be chartered with 6%.
From this 6%, part of this will be back to the government as the interest of the liquidity that provided to the bank, and the rest will be to the banks to cover the overhead and the margin. The third one, there is government guarantee for this financing, which the government or arrears of a cooperative obligation to the bank. The government will intercept the village funds. As you know, the village funds are provided by the government to the villages to support their development, which disperse yearly. From this cooperative, this village fund will be intercepted by the government, and then the bank will ask the Minister of Finance to provide this village fund to cover the arrears or default. Technically, this is a zero risk financing scheme, yeah.
I think the amount, if we talk about what is the magnitude of the loans will be financed to the number, the amount this year, we still depend on the readiness of the cooperatives in terms of their organization, the business, yeah, and the system. We are still waiting for that. Thank you.
Thank you, Pak Agus. I think let me add a little bit in terms of the Koperasi Desa Merah Putih, the Village Cooperative, yeah. I think in terms of the risk premiums, going to be close to 0% because we have something like the scheme is channeling, channeling scheme. The liquidity comes from the government, basically from the Minister of Finance. We have a guarantee to intercept the village fund while something happens with the loan from the village cooperative.
There is no risk with the bank because the money, the liquidity, and also the guarantee from the government.
Thank you. Thank you, Pak Heri, Pak Agus, Bu Fifi. For the last one, I would call one last person. Please, Melissa, please unmute yourself.
Hi, Hiber. Thank you very much for letting me ask. I just had a few questions. Firstly, SM loans in retail and SME, can you share a little bit more what's happening there? We've seen that also a rising trend for other banks. Secondly, in terms of the subsidized housing loans that you are doing, can you share what the economics of these loans are and how much you're intending to do as a percentage of your loan book over time? Lastly, the third question is on your micro loan growth.
I understand that you're still cleaning up and you are still working to slow the growth and the growth is negative. When do you see you will end this cleanup and what would take it for you to start seeing a growth in the segment again?
Thank you for the questions. Question number one, and then Bu Melissa, maybe you involve also in the FLPP, the subsidies for the housing loan. Please, Bu.
Thank you, Pak Heri. Hi, Melissa. Thank you for your questions. Regarding your questions about increasing the NPL and also special mentions in the SME sectors, we understand that the conditions in the middle and low income currently actually is quite challenging. That's also impacting some of our clients, in particular the clients that are still related to the COVID-19 back to 2022.
They have been restructured many times, but the conditions at this moment actually is a big struggle for them. That is why we see an increase in the non-performing loan and also special mention in SME, Melissa. Thank you, Melissa. From the subsidized housing loan, currently BRI already dispersed for more than 15,000 units from the about more than 17,000 quota that already committed for BRI. We believe that during. One or the next two months, we can fully disburse for all the quota that already committed to BRI. Also, from the FLPP program, the government gives us the competitive funding around 1%. Meanwhile, the public will pay for the interest about 5%. We still believe that this program is still needed by the public and will still continue for the next few years. Thank you, Bu Fifi. Thank you.
Thank you, Bu Melissa.
The other question is still about the micro loan growth is still negative. When do you see this flattening out and also when will you be ready to grow in the program? Pak Ahmad, you want to take a question? Or Bu Fifi, maybe?
We'll add a little bit.
Okay. I will start and probably Pak Ahmad can add more color on the micro loan growth. Melissa, as you mentioned earlier, currently we are still in the process of resolving the bad debt by doing a lot of initiatives. At this year, I think the focus of the initiatives is more on the human capital capability. The micro loan officers, the BRI unit managers, the micro business managers. We also consider the current economic situations.
You know that when the GDP ratio is less than 5%, usually it's a bit hard for a bank like BRI who focuses on the micro segment to grow the micro segment aggressively. Considering the macroeconomic conditions and also the process that we still are ongoing to revamp the business process and also human capital capability in micro, this year we'll try to grow micro in bank-only level like flat, probably 0 to 1%. The driver is still coming basically from KUR and from the payroll loan in micro that we call Briguna Micro. I think this particular product also starts to continue some improvement by penetrating more into our existing customers. I think next year, 2026, we are still in the process of revamping our initiatives in micro. It might take probably another two years for our micro banking to start regrow the competitors again. Thank you, Melissa.
Pak Ahmad, maybe you would like to add some color? Okay.
Thank you, Pak Hery. Like Bu Fifi said, we are now still revamping the strengthening the business process in micro. We believe that the micro segment still has room to grow positively in the future. Next year, we hope that we can, maybe around 2%. I think that I can.
Thank you, Pak Hery. Thank you, everyone. Thank you, Pak Ahmad. I think that would be the last question for today.
Let me give a close. Thank you to the panelists and industrials as well. First of all, thank you very much for your cooperation. Questions are taken. Let me give a little bit of background. Bank Rakyat Indonesia is underway doing the transformations.
We know we are facing the problem in the area of the cost of fund, a little bit higher compared to the output and also the cost of credit. So many things have done, but it's still too early to see the impact of the transformation we have done so far. In terms of funding side, we already mentioned earlier so many initiatives we have done. For example, the way we are strengthening our funding franchise to get more cheaper funding, such as the current and also the saving account, and then also the transfer banking. Bank Rakyat Indonesia is lucky; we have a very strong infrastructure for transfer banking, which is retail and also the wholesales. We need to push more productive in terms of uses and in terms of the capacity in the market with our customers as well.
On the lending side, we are fully aware we have to revamp the micro business, mentioned Bu Fifi and also Pak Ahmad. We are underway to revamp not only the business process, but also related to the monthly people. People management and also the way we run the business, more robust in terms of the way we get a good pipeline as well, and then also the monitoring system. We also already have in place in the region level and also the branch level, the risk management strengthened, and also the operation. Hopefully next year, while the initiative will be implemented better, the result will be coming good for us as well. Again, thank you very much for your involved questions and attending the call meeting this morning. Hopefully, we get a good something effort in the next future. Thank you very much.