Hi, good morning everyone, and thank you for joining us for BRI's third quarter 2025 earnings call. We'd like to start the meeting now. First, please let me introduce the members of our Board of Directors who are with us today. Our good CEO, Pak Hery Gunardi.
Good morning.
Our first CEO, Pak Agus Noorsanto.
Good morning.
Our CFO, Ibu Viviana. Our Director of Micro, Pak Akhmad Purwakajaya. Our Director of Risk Management, Pak Mucharom. Finally, our Director of Commercial, Pak Alexander Dippo. Now, I would like to mention a few points before we get started. First, for everyone joining us on this Zoom call today, I would strongly encourage you to download a copy of our presentation materials currently available either from the IR homepage of BRI or from the link we sent this morning. Second, during the Q&A session, please raise your hand. I will then invite you to unmute yourself to ask the questions. Now, without further ado, I'd like to invite our good CEO, Pak Hery Gunardi, to share the key highlights for the third quarter. Pak Hery, the floor is yours.
Thank you, CEO, good morning everyone. Before discussing our results, I would like to give you some color on the current update on the microeconomic conditions. Indonesia economy grew moderately second quarter 2025 with household consumption and MSME activity still under pressures. Inflation remained within BRI target at 2.65% year-on-year, supporting macroeconomic stability. BRI MSME index indicated continued cautions in the lower segment, but recovery prospects remained positive, supported by higher government spending and ongoing subsidy measures to boost domestic demand, including the new stimulus program of around IDR 30 trillion launched on October 17, covering cash handout for IDR 35.1 million households, expanded internship program to boost youth employment. Accelerated fiscal disbursement in fourth quarter 2025 is expected to boost domestic demand and support a gradual recovery in 2026. BRI remained well-positioned to capture this tailwind while maintaining prudent amid global uncertainties.
As the largest microfinance institution in Indonesia, BRI continued to support key national programs such as QR, Ultra Microfinancing, Free Nutrition Meal, Village Cooperative, and the Housing Initiative to stimulate inclusive growth. Through risk-based pricing, strengthened underwriting, and also digitally-enabled microservices, BRI ensured that financial inclusion continued to generate both social impact and sustainable profitability, positioning the bank for resilient growth into 2026. First of all, while we take a look at the liquidity and monetary condition in Indonesia, for instance, liquidity condition continued to improve in the third quarter 2025, supported by accommodative monetary policy and stronger money supply growth. M2 expanded 7.6% year-on-year in September 2025, driven by accelerating deposit growth at 8.5% in August 2025 versus 7% in July 2025. That is reflecting improving financial system liquidity.
Central Bank or Bank Indonesia maintained a progressive stance, cutting the policy rate to 4.75% and narrowing the corridors to boost liquidity. However, the benchmark rate was kept unchanged in October, signaling a shift from monetary easing to faster policy transmission to real sectors. On the other hand, SRBI issuance and yield decline, indicating reduced liquidity absorptions by the central bank and further supporting system liquidity. From BRI perspective, ample liquidity and faster transmission align with our focus on micro and retail consumer customers as stronger liquidity supports higher economic activity, improved borrower resilience, and lending growth opportunities while maintaining asset quality. Overall, a stable rupiah, continued monetary accommodation, and accelerated fiscal disbursement are expected to sustain better liquidity and support healthy banking sectors' growth.
While we take a look at the banking industry performance, we start from the asset growth remained moderate, in line with the slower loan expansions as the bank adopted more selective lending amid ongoing macroeconomic uncertainty. Loan growth stood at 7.6% year-on-year, reflecting cautious credit strategies and still subdued MSME demand. Deposit grew strong at 8.5% year-on-year, mostly led by 14.3% growth in current account, while saving and time deposit grew by 5.5% year-on-year and 5.4% year-on-year, respectively. LDR at 86%, indicating balanced funding and lending dynamic. Net interest margin was 4.5% in August 2025, slightly lower year-on-year due to the higher funding costs from earlier liquidity tightening in the first half of 2025 and slower loan yield repricing. However, we have seen a gradual sequential improvement in September 2025, supported by easing funding costs and better liquidity conditions.
Loan at risk and NPL remained stable, with the banking industry loan at risk at around 9.73% and gross NPL stood at 2.3% in August 2025, reflecting manageable asset quality. Capital adequacy ratio stayed robust at 26%, comfortably above regulatory minimums, reflecting solid capital buffers. Come back to the BRI. Currently, we are continuing initiatives already in place. BRI is expanding its transformation agenda to accelerate improvement in funding structure, loan quality, new growth engine, and also enabling the capabilities. Establish payable cross-key strategy sharing, including lending, funding, distribution, risk, and data analytics to drive discipline execution and measurable impact. Recalibrate brand and digital network to improve productivity and customer experience, supported by stronger digital channel performance that reinforces BRI transaction ecosystem. Strengthen micro-operations with specialized offices and improve underwriting while driving consumer loan growth through payroll expansion, mortgage partnership, and also the gold-pawning business.
Of course, we also are likely to grow in terms of the auto loan as well. First of all, while we take a look into the initiative, we are already done until the quarter three to 2025. In the area of merchant ecosystem, revitalization has shown early traction with several activities: program launch at ski food and beverage hotspot, and also merchant engagement event completed across major regional offices. Lifestyle-driven CASA campaign rollout in selected urban clusters has helped increase the transaction balance and deepen merchant relationships. We are also optimizing our territorial coverage and deepening our presence within customers' ecosystem and also value chains. The strategy helps us to penetrate business clusters, capture more transaction flow within each ecosystem, and ultimately accelerate CASA acquisition through stronger customers' engagement and also the integrated solution.
Lastly, strengthen collaboration with subsidiaries to drive bundling product and also integrated customer campaign across ecosystem, for instance, goal setting and also installment product through BRIMO or mobile banking platform, auto loan joint financing through BRI Finance, and also bank insurance for general and also life insurance. In terms of the initiative and asset quality update, we would like to inform that recruitment and also reskilling of loan officers continue with rollout of around 450 micro-Briguna loan officers and field collection staff across the region. Operational improvement by deploying plus 2,000 micro-unit supervisors enhanced BRI spot. This is the underwriting engine and pipeline management and centralized monitoring dashboard for the real-time tracking. Refined pre-screening tool using sectoral and also regional risk model and dynamic approval limit appeal applied across micro and also the SME segment. Maintaining payroll loan business domination.
As you know, for more than 10, 20 years, BRI is very strong in the payroll business among the competitors in the banking in Indonesia. We would like to rebalance customers' composition within bank assisting to bank and also increase the penetration to optimize yield and also asset quality. Driving value, value chain synergy through the all segment to increase payroll acquisition. In terms of rollout, we are exporting in the big cities, for example, to enhance the expanding mortgages market in Indonesia. With the cities like Jakarta, Surabaya, Bandung, flagship consumers event, there is a focus full spectrum of BRI consumer product focus on tier one developer, new to bank, quality customers' acquisitions. In terms of the synergy, the way we would like to strengthen the auto loan business and wealth management business.
For auto loan joint financing initiative launched to enhance the cross-selling between BRI and BRI Finance, leveraging BRI existing customer base while expanding the new customer acquisition through competitive and also integrated financing solution. Optimization, optimization the investment product offering to drive the income and CASA growth supported by synergy with corporates and commercial segment to capture strategic client and flagship activation program amid expanding customers' base and growing fund under management. For Pegadaian, for example. Pegadaian gold services and gold ecosystem offering, pawning, lending, gold installment, gold saving offers a unique end-to-end gold services value chain from manufacturing to retail and also pawning while leveraging the BRI group ecosystem to expand reach and strengthen synergies and also drive the sustainable growth. Tring is the new super app of Pegadaian just launched last month.
Pegadaian Tring applications strengthen digital presence and scalability, pawn and also gold business financing, enhancing profitability, ecosystem synergy, and customers' engagement across to the BRI. Actually, Pegadaian promise will have the numbers of the users across the company around the per million share at the end of this year. We continue to monitor the optimized digital channel performance such as BRIMO, merchant business, securities, which remain key drivers of retail CASA growth. For BRIMO, number of users increased by 19.4% year-on-year, reaching 44.4 million users with 56.7% penetration rate, is quite higher compared to the peer. More importantly, we see improvement in monthly active user from 16.7 million to 19.9 million, almost 20 million, increased by almost 20% year-on-year. In terms of financial transactions, also increased by almost 26.5% year-on-year, and transaction value grew by 25.6% year-on-year.
The numbers of business merchant risk 314K, down 6.5% year-on-year, reflecting our effort to streamline non-active merchant and focus on productive outlet. The numbers of productive business merchant rose 3.3% year-on-year, while sales volume merchant grew almost 30% year-on-year, supported by our merchant engagement initiative that strengthened usability, trust, and also transaction adoption. Our curious sales volume increased by 133.1% year-on-year, and the numbers of transaction grew by 161.4% year-on-year. Our retail transaction initiative has helped drive higher money cost circulation within the BRI ecosystem and supporting a more efficient funding structure. We continue to monitor and drive the growth of the second engine in consumer and also the goal business lending and saving by focusing on the quality customers and improving the portfolio traction.
For consumer loan, grew 9.7% year-on-year, driven by payroll loan up to 9.8% year-on-year, and then the mortgages also increased up to 14.0% year-on-year, resulting in the 48 basis point year-on-year increase in consumer loan contribution to total loan. BRI remained the market leader in the payroll loan, supported by the resilient S3 segment, civil servant, military, and also police officers, and expansion into the private sector payroll, focusing on the higher income customers to sustain the quality growth and optimize yield. For auto loan joint financing, also grew 347.1%, still small in size, but with strong growth potential from the captive market and the fast-moving car segment while maintaining a manageable risk profile. Fund under management grew 10.8% year-on-year, reflecting sustained customer growth transaction to income reborn 40% quarter to quarter in the quarter three 2025, supported by stronger cross-selling and improved product mix, driving higher customer activity.
Goal-related product shows strong growth with goal installment loan up to 152.6%, targeting high net worth individual, wealth individual customers, HNWI, and goal saving up to 52.7% year-on-year, with active customers increasing 28.1% year-on-year, supported by expanded sales channel B2B transaction and cross-selling to BRI group customers through BRI extensive distribution network. As for funding structure, we continue to see improvement in the funding mix, supported by ongoing initiative and a more favorable liquidity management. Total deposit grew 8.2% year-on-year in September 2025, supported by strong 14.1% year-on-year CASA growth. CASA ratio remained high at 67.6% that increased by 210 basis points quarter to quarter. Quarter to quarter deposit growth was robust, driven by a 2.8% CASA and most importantly, saving increased by 1.1% quarter to quarter, indicating a maintained momentum and growth transaction.
Looking forward, we remain optimistic about the direction of our funding mix and cost, supported by our ongoing effort to strengthen the funding franchise, as well as central bank more accommodative spend and the government expansive fiscal measures, which help maintain the better system and liquidity. From the loan perspective, micro lending remained soft with cooperatives contracting by 9.6% year-on-year, reflecting ongoing business consideration and also focus on loan quality and recoveries. Meanwhile, consumer, commercial, and gold pawning segment drive 1.52% quarter to quarter total loan growth. On the other hand, margin pressures from portfolio mix was contained as the yield remained stable at 13%, supported by higher contribution from Pegadaian and PNM, while more efficient funding structures lowered the cost of interest-bearing liabilities by 6 basis points. The balance approach to help sustain a stable NIM at 7.75%.
As of September 2025, balance sheet growth shows a gradual improvement from June 2025, signaling a positive trend in the growth trajectory path. Overall, expansions remain moderate. Our total asset grew 8.2% year-on-year, supported by 6.3% loan growth. Deposit grew 8.2% year-on-year, supported by strong 14.1% year-on-year increase in CASA. Both current and saving account continue to post quarter to quarter growth, reflecting the positive impact of retail funding initiative and improving the liquidity environment. Fee and other operating income grew 0.4% year-on-year, supported by higher gold sales, fee income, and also the treasury activities. However, recovery income softened in the quarter three 2025. Going forward, we expect recovery income to improve toward the end of the full year 2025, supported by the deployment of dedicated collection and also recovery team across all levels from head office to the BRI unit.
From a profitability perspective, we remain focused on improving asset quality, particularly in the micro and small segment. PPOP declined slightly, 0.96% year-on-year, but edged up 0.02% quarter to quarter, supported by stable yield, lowering funding costs, and also well-managed operating expenses. We still booked a negative growth of net profit around 9.1% year-on-year. Please note that as of September 2024, we had one-off non-loan provision reversal of around IDR 4.1 trillion due to construction SOE restructuring scheme. Key metrics are breaking as expected as we remain in the resolution phase. However, we start to see the gradual improvement in NPL and also SML in quarter three, while the profitability metric faced challenges. Core earnings remain stable, supported by strong retail funding growth and also increased contribution from the subsidiaries. Reported NIM stood at 7.75% in the quarter three 2025, down 10 basis points quarter to quarter.
However, excluding a one-off corporate client write-off in second quarter 2025, normally NIM actually improved by 2 basis points, reflecting stable yield and lower funding costs. Cost of the third party fund improved quarterly from 3% in September 2024 to 2.8% in September 2025, driven by strong nominal CASA growth. LAR declined by 1% year-on-year, and LAR COVID was at 52.6%. Cost of credit was 3.24% in the third quarter 2024. Furthermore, the gross NPL ratio was flat at 0.03% quarter to quarter, and SML decreased by 0.14% quarter to quarter. Profitability metric improved quarter to quarter as return on asset improved 33 basis points quarter to quarter, and our ROE return on equity also improved 160 basis points quarter to quarter.
Finally, aligned with the commitment to effective capital management and value creation for investors, we are progressing with the share buyback program announced at the 2025 AGM with around IDR 2.5 trillion of remaining budget, reflecting our confidence in BRI's solid fundamental and the future growth potential. Now, I would like to turn the call over to Bu Vivi, our CFO, to discuss on financial in more detail. Please, Bu Vivi, to continue. Thank you very much.
Thank you, Pak Hery. Hi everyone. Thank you so much for joining the call. I would like to start with the balance sheet postures of Rakyat as of September 2025. Our asset growth was 8.2%, where loan grew around 6.3% year-on-year, or 1.5% quarter on quarter, slightly lower than second quarter growth of 3%. The portions of loan to our earning asset continue to increase from 70% and now is 72%.
Despite slowing growth in a micro bank-only level, contributions from PNM and Pegadaian continue to increase from 9.74% of total loan a year ago, and now it's already 10.96%. In micro segment, around 25% of our micro portfolio now coming from Pegadaian and PNM, previously around 20-21%. We continue to use our loan and financing provisions. As you can see here, the provisions continue declining because we used to absorb the write-off, especially in micro and small segment. However, our loan loss ratio still 5.6% of total loan, higher than pre-pandemic level 4.1%. The growth in loan supported by our manageable third-party fund growth at around 8.2% year-on-year, or minus 0.55% quarter and quarter. We continue our aspirations to move up our CASA while we continue the growth in CASA. Our cost of CASA actually declined from 1.67% to 1.62% quarter on quarter.
From leverage standpoint, we are able to increase modestly our leverage to 6.3 times in September 2025 from 6 times a year ago period. Move to the PNL. In September 2025, the net interest income grew 2.9%, supported by stronger yield contributions from PNM and Pegadaian. Like I mentioned previously, the contribution now is around 25%. This helped maintain a stable loan yield, actually around 13%. The NIM declined 10 basis points quarter on quarter. If you remember, in the second quarter this year, there was a one-off corporate client write-off that inflated the second Q NIM, actually. We previously communicated this during the first half earning call. If we exclude this, actually the NIM improved by 2 basis points Q on Q. Non-interest income rose slightly by 0.4% year-on-year, driven by higher fee-based income and also stronger gold sales and treasury gain, while loan recovery moderated.
The recovery income from claim, the composition now is around 40% to 40%, declined from previously around 46% a year ago. It shows that actually our internal capability to do recovery started to improve. Now the compositions from our internal recovery increased to around 58%. However, please note that the current economic conditions make it more challenging for us to do higher recovery income internally. On operating expenses, remain well controlled, up 5.1% year-on-year. I think it is still within our range of 6%-8% year-on-year for OPEX growth. The cost-to-income ratio is still within our target, around 42.8%. Due to the softer recovery income, like I mentioned previously, the PPOP declined 1% despite a solid net interest income that we had in September 2025.
However, on a sequential basis, actually quarter on quarter, the PPOP increased around 2 basis points and net profit rebounded 15.5% Q on Q, indicating improving operational performance. Move to the next slide. We will talk about the liquidity conditions. As of September 2025, our loan-to-deposit ratio was 86.5%, up slightly from 84.9% in the first half. We have managed liquidity conservatively, supported by growth in retail CASA, driven by retail transactions, providing us with a cost-effective funding base. Our loan-to-deposit ratio at the tight actually is 90-92%, so we still have room actually to optimize our loan and deposits. Liquidity metrics remain adequate with both liquidity coverage ratio, or LCR, and net stable funding ratio staying well above the minimum regulatory requirement at 141.3% and 122.9%. Next slide.
If you see in this slide, actually our consolidated net interest margin is steady around 7.75% despite pressures in asset quality and portfolio mix in bank-only. This is again supported by the increasing compositions of Pegadaian and PNM in our micro mix, so it helps to keep the yield in micro segment stable around 18%. Our consolidated lending yield, like I mentioned, for the third quarter decreased by 19 basis points to 13%. As mentioned earlier, the second quarter figure basically elevated because of the one-off corporate client write-off. Next slide. Non-interest income was broadly flat due to the software recovery income. The core operating expenses were well controlled, 5.1% year-on-year. We remain on track basically with our rule of thumbs to keep the OPEX to asset ratio relatively around 4%.
Fee and commissions income increased 2.6% year-on-year, contributing around 39% of bank-only non-interest income, up from 38% in the same period last year. Notably, the net gold fee income surged to IDR 1.3 trillion from IDR 457 billion year-on-year, reflecting Pegadaian's strong performance. On the expense side, the other operating costs increased, mainly driven by the higher insurance reserve, especially in our subsidiary, following the adoption of IFRS 17 in second quarter of 2025. Next slide. At the bank-only level, we continue to improve cost efficiency with OPEX to asset ratio maintained at 3.2% in nine months 2025, in line with the five-year average of 3.22%. At the consolidated level, however, the operating expenses increased 17.4%, mainly driven by higher costs in the subsidiaries.
The increase was primarily attributable to Pegadaian's higher GMA expenses due to the bullion banking activities, and then also PNM, and this is because PNM expansions on a number of new loan officers to strengthen the customer engagement and improve repayment performance. If you see the bank-only other expenses, we also see an increase. I think this is because we intensify our recovery efforts, so we hire roughly around 2,500 field collectors and also using third-party partners to improve our recovery income going forward. We also readjust our compensations for the non-permanent employees, and also we are building up provisions basically for operational risk. Next slide. Our capital positions remain robust with a total capital adequacy ratio of 25.4%, and tier one is 24.3%. It's way above our appetite for tier one ratio, actually it's around 19%.
The full year 2025 dividend payout ratio increased to 86%, and we have an opportunity basically to have another increase in dividend payout ratio that will be paid in 2026. Over medium term, we aim to gradually bring our total CAR to close to around 20%. I would like now to turn the presentations over to our Director of Risk, Pak Mucharom, to discuss our asset quality.
Thank you, Bu Vivi. Let me continue to discuss about the asset quality. Our consolidated by 18 basis points year-on-year to 3.08%, driven by higher NPLs across most segments except corporate, which improved by 93 basis points year-on-year. The increase in consumer NPLs was mainly driven by the implementation of the one-chapter principles in third quarter in this year, where credit card exposure now consolidated with other consumer products, resulting in temporary uptick in NPLs across the portfolio.
Market NPLs increased by 54 basis points year-on-year to 4.31%, affected by weaker household purchasing power and softer property market liquidity. Over the past decade, Indonesia's property market has recorded only modest nominal growth of around 17% from 2016 to 2024, which, when adjusted for inflation, translates to an effective price decline of about 6%. Payroll loan NPLs also edged up by 38 basis points year-on-year. Overall asset quality in these segments remains relatively resilient, supported by a strong contribution from specific borrowers like civil servants, military, and police. SME NPL increased by 39 basis points, largely coming from legacy pre-COVID disbursement, which accounts for 33.85% of SME NPLs and are being gradually resolved given the collateralized nature of this loan.
Micro NPL remain under pressure as the 2023 cooperative loan cycle matured, contributing to 33.7% of total micro gross downgrades in 99 months in this year, while we expect NPLs to stay elevated in the near terms. Early signs of improvement are evident, with micro SML declining 20 basis points year-on-year. We continue to focus on resolving the 2023 cooperative portfolio through proactive restructuring, tenor extensions, and also write-offs, and expect this patch to be largely resolved by the first half next year. Overall, the consolidated SML ratio improved to 5% from 5.56% year-on-year, supported by a 1.7% year-on-year reduction in bank-only SML volume. This improvement was partly offset by higher write-offs, which increased 2.54% year-on-year to IDR 34.4 trillion. Our loan provisions total IDR 80.9 trillion, equivalent to 5.6% of total loans between 2010 and 2019 prior to the pandemic. Our loan loss risk ratio never exceeded 4.1%.
As credit conditions normalize, we expect this ratio to gradually return closer to pre-pandemic levels. Our NPL coverage ratio, which peaked in 2022, has continued to normalize and now stands at 183.1%. We anticipate this ratio remaining within the range of 170-1,000% throughout this year. Our decline to 10.7% as of third quarter in this year continues the downward trend since December last year. The improvement reflects stabilization in SML formation, particularly in the newer cooperative loans. We are now focused on resolving asset quality issues in micro and SME segments while maintaining conservative stance with loan at-risk coverage at 42.6% as of third quarter in this year. We discussed about our cost of credit.
Our cost of credit stood at 3.24% in the third quarter in this year, down by 48% quarter on quarter, driving an improvement in net cost of credit, which declined by 30 basis points quarter on quarter to 1.51% in third quarter in this year. This was supported by lower overlays utilized for micro write-offs and incremental improvement in asset quality within the micro segment, reflected in an 81.9% year-on-year decline in SML change, indicating lower new delinquency formation consistent with early indicators showing better hinges for off-downgrade to SML in nine months after booking in 2024 in cooperative loans. We write off around IDR 34.4 trillion in third quarter in this year, with IDR 4 trillion in September alone, mainly from the micro segment.
To accelerate better resolution covering both the 2023 cooperative and pre-2023 disbursement, we plan an additional IDR 2 trillion micro write-off budget in this year, bringing total write-offs in this year around IDR 41 trillion, maybe similar to the last year. We continue to strengthen our risk management through transformation aligned with industry best practices. Key initiatives include segment focus and risk organization, 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 Akhmad, to share more on the ultra micro and also micro business segments. Please, Pak Akhmad.
Thank you, Pak Mucharom. Good morning, everyone. I tried to share around three pages of slides. First slide, PNM and Pegadaian's contribution to consolidated micro loans rose to 24.9% in third quarter 2025, up from 21% last year.
Pegadaian led the growth with 29.4% year-on-year increase, driven by 37.4% year-on-year rise in gold backed pawn lending. In contrast, PNM's growth slowed to 2.8% year-on-year, more in line with various micro loan performance. Overall, the shift in portfolio mix within consolidated micro supported stable micro yields at 18.1% and boosted their contribution to consolidated NEE to 21.9% from 19.3% a year ago. As mentioned by Pak Hery before, gold backed lending and saving will be part of our second engine of growth along with consumer segment. Pegadaian continues to leverage various networks and group ecosystems to expand gold-based business in savings and pawn services, while also growing its bullion banking business, now holding nearly 13.7 tons in gold savings and 2.9 tons in custodian storage. We expect Pegadaian to have steady growth in 2026 as gold prices remain relatively elevated.
Lower real interest rates, continued monetary easing, and ongoing geopolitical risk, and central bank gold purchase are likely to support demand for gold. However, stronger global growth and the XY could moderate the pace of growth. Meanwhile, we are deliberately slowing lending at PNM, where cost of credit remains elevated. Next slide. We see that micro loan growth declined by 4.3% year-on-year in September 2025 as we continue to focus on asset quality collections. This included strengthening operation by aging supervisors in all micro units, deploying field collection staff, tightening underwriting standards, and streamlining risk and operation across the micro segment. Micro payroll loan or Briguna disbursement, up 18.8% year-on-year. This reflects its role as part of our second growth engine, supported by the introduction of dedicated Mantri Briguna or micro payroll loan staff of around 450 staff since July 2025 and stronger partnerships with civil servants, military, and police.
These partnerships expand reach into rural areas where various micro networks are already strong. Core slightly contracted at 3 basis points year-on-year and reached 72.6% of 2025 allocation as of September 2023. Core and Briguna are expected to be the main driver of micro disbursement through 2026. Meanwhile, cooperative growth will likely stay subdued as we continue to clean up the 2023 batch and resolve legacy COVID restructured loan. Borrowers per loan officer decreased further to 476 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 officers remain steady at IDR 17.9 billion, with productivity expected to increase as we execute on our micro transformation agenda. To strengthen this micro foundation, we are focusing on three key areas.
In first areas, in human capital, we are strengthening organizational capabilities through extensive reskilling and retraining programs, redesign recruitment and career journey, and remodeling of micro loan officer roles to improve productivity and credit discipline. In business process areas, we are enhancing credit culture and operational discipline by mandating on-site customers' visits by loan officers and micro unit heads before loan approval, while optimizing daily workflows to improve efficiency and controls. In risk management area, we are advancing credit risk management through improved credit scoring models, strengthened underwriting process, and added field collection to ensure better collection. Next slide. As of September 2025, IDR 44.5 trillion from the 2023 cooperative disbursements remains on our balance sheet, while IDR 10.9 trillion has been written off and IDR 146.2 trillion has been paid off.
Of the remaining 2023 disbursements, 19.9% are in special mention loan, 12.9% in non-performing loan, and 24.6% has been written off, and 19.8% have been restructured. We are seeing that 2024 cooperative advantages are looking better than 2023 cooperatives, but we are still monitoring the portfolio until it has been fully seasoned. Now, I'd like to turn the presentation back to Siaga to organize the question and answer segment. Thank you.
Thank you, Pak Akhmad. Now we'll move on to the Q&A session. I would like to remind the participants to request for us to unmute, and then we can proceed to the questions. Okay, Pak Raymond, please unmute yourself, and you can please ask the question.
Okay. Hi, Pak Siaga. Can you hear me? Okay, thank you. Thank you for the opportunity. I have several questions here.
First one on the micro loan growth is negative, and if I look at the disbursement trend, it has been on a declining trend. This is the new norm going into 2026, so that's the first one. Second one is on the CAR. Ibu Vivi mentioned earlier that your long-term targeted CAR would be 20%. My question is, the 20% from 2025, is this going to reflect a higher payout ratio, or is there a change in the loan mix towards a corporate portfolio where the risk-weighted asset factor will be higher? The third one, the last one, is on the write-off trend, which has been stable towards improving trends. You mentioned earlier full year this year will be more or less towards IDR 41 trillion-IDR 45 trillion, so that shows a downtrend in the write-off on a quarterly basis.
Does this mean that the credit cost will be declining as well from around 3.5% to maybe towards 3%? Thank you. Thank you, Pak Raymond.
Now, I will invite Pak Hery to assign the questions.
Yeah. Thank you, Pak Raymond Kosasih, for questions. Basically, we have the three questions here. What I think Ibu Vivi can take to respond to the questions.
Okay. Pak Raymond, thank you so much for the first questions for the micro loan growth. I think, yeah, you're right. I think, especially in cooperatives, the disbursement, if we see on a quarterly basis, you're right, it's declining. In 2025, I think it is due to two factors.
The first one actually is, you know that we are still in the process of revamping the business process, improving the capability, and also putting the underwriting methodology more strict, so intentionally the cooperative growth will slower. The second one, I have to say that the environment for micro currently is not supportive enough, basically, to drive the micro loan growth higher. When you ask whether this is a new normal, I would say no. In the short term, probably yes. Actually, for example, like 2026, we want to exercise whether cooperatives can start to grow like a positive, probably like 1%. We do hope that we can revamp normalizing the growth in 2027 and going forward.
Normalizing the growth doesn't mean that micro will grow like 14%, 16% like we had previous years ago, but it's more on the modest pace, roughly around 9-10% in the longer run. The second question is about the capital adequacy ratio. I think the first thing that we always think, before we decided, actually, if we have an opportunity to grow healthier, then we will use the capital to grow. Otherwise, we will give the capital back to the shareholders, whether this is through higher dividend payout or higher buyback. I think so far that is still the plan. The last one is the write-off trend. The write-off trend, I think this year, yeah, it will be roughly around IDR 38 trillion-IDR 40 trillion or slightly declining than 2024.
You're right, the fourth Q, I think the fourth Q, when we are looking at the trend of our cost of credit, we have a room basically to increase the write-off as well. When your question actually is asking whether the COC will decline from 3.5% to 3%, it will depend on the time frame that we are talking. If the time frame is until December 2025, I will say no. Like I mentioned previously, the guidance for COC is 2.2%-3.3% on 2025. In 2026, I think we are still finalizing the budget. I think, of course, because we will see that cooperatives 2023 actually very minimum in our balance sheet. At this moment, we are talking somewhere around 2.9%-3.2% for 2026. We will finalize our numbers first, and we will announce in 2026. Thank you, Pak.
Thank you, Ibu Vivi.
Now, I will mix the questions from the chat box also. There is one question from Hasmodi, and the question is regarding the one-day term principal in the consumer loan segment, basically. Pak Hery. The question from Hasmodi is, is the one-day term classification from consumer a norm for industry or something that's changing more recently?
I'll be able to respond to the question. It's just one obligatory.
Yeah. Okay. Thank you, Her. I think you're right. I mean, the concept of one-day term actually is already implemented. For consumer, I think what happens in September, it's the deadline for the implementations for credit card customers. That's why it impacts the consumer segment. In September, I think we already integrate the data from the card with our financial system using the ID number of our customers.
That's why, as a conservative measure, we implement the one-day term for the credit card as of September. Thank you.
Thank you, Ibu Vivi. Now, I will take one question live. It's from Jaden. I think Jaden will win the final question for today's earnings call. Jaden, please unmute yourself. Hi, Jaden.
Hello. Good morning. Thank you so much. Can you hear me okay, Siaga? Yeah, yes. I can. Okay, great. I have two questions. The first is on the funding cost. If I look at deposits, it looks like they were steady at 3% all three quarters this year. Have we seen any improvement and any thoughts on how much the funding cost could go down next year, as we've had a lot of improvement in the environment? My second question is on some of the government programs.
I think the government is looking at the Koperasi Desa Merah Putih at IDR 200 trillion, which seems like a step up from before. Any comments on how much BRI will participate, and will that move the loan growth much into next year? Those are my two questions, and thank you very much.
Thank you, Jaden, for the questions. We start from the question number two, but people will respond to your questions, please.
Thank you for the question. Government program, yeah? Yeah. Regarding your question about the credit KMP, the first stages of the financing that the government expected is for the capital expenditure on building the infrastructure of the cooperative itself. Out of the IDR 200 trillion that needed this year, probably our share will be around IDR 55 trillion, which is almost similar with the other big banks.
For the next years, we will come to the second stage where we're going to finance the operatings of the cooperative. The numbers are not on the table yet, but I think it's around IDR 500 million-IDR 1 billion for each cooperative. Depends on the economic that we want to grow. I think that's the question. Thank you.
Okay. Ibu Vivi, can you take the question number one, the cost of fund?
Yeah. Thank you so much, Jaden. When we are looking at the cost of the cooperative fund quarterly basis, it's like a manageable around 3%. However, if we are looking at the marginal, marginal is like the month-on-month basis, there is a significant improvement, sorry, declining. Basically, like July, the cost of the third-party fund is 3.15%, and then the August is 3.12%, September is roughly around 2.8%.
This is basically if the conditions of the liquidity continue to be favorable like this, we believe that it will give us more room to manage the cost of third-party fund going forward, entering. It is a very important muscle for us to enter 2026.
Thank you, Ibu Vivi. Thank you, Pak Hery. I think the question from Jaden concludes our earnings call today. Thank you everyone for taking the time to join our earnings call. We appreciate your support for BRI. Closing. To wrap up today's call, I'll now hand it over to Pak Hery, our CEO, for his question remarks.
Thank you, Siaga. Thank you, everyone, for joining us for the conference today from anywhere, Jakarta or from overseas.
For your questions and during the analyst meeting today, before we close, I would like to take a moment and highlight what we have been doing to strengthen our performance as insurance sustainable growth going forward. Over the past two quarters, we have taken significant steps to improve our portfolio quality and productivity through enhanced business process, tighter end-to-end risk management, and stronger operational executions. We have also continued to enhance our digital capabilities and customer's experience while maintaining discipline, cost control, and also the healthy capital position. Looking ahead, we remain optimistic. Government and central bank initiative to support the economy combined with BRI's strong fundamental and extensive economic ecosystem give us confidence that we are well positioned to capture the recovery momentum in 2026 and beyond. Once again, thank you for your continued trust and partnership with BRI.
We appreciate your support and look forward to updating you again next quarter. Might be next year. Normally, we are doing the analyst meeting in January, around January or February 2026. Once again, because due to the limitation of the time and schedule, while some of you still have the questions in regard to our performance, can directly contact the investor relations Bank Rakyat Indonesia. Again, thank you very much. Have a good day. Thank you.