Good morning, everyone. We would like to thank you for joining us for Bank Rakyat Indonesia's full year 2025 earnings call. I would like to begin the meeting now. First, I would like to introduce the members of our board of directors who are with us today. our group CEO, Pak Hery Gunardi.
Good mornIng, everyone. Thank you for joining us.
Our Deputy Group CEO, Ibu Vivi.
Hi, everyone. Thank you.
Our CFO, Pak Royadi.
Morning.
Our Director of Micro Business, Pak Akhmad Purwakajaya.
Morning.
Our Director of Risk Management, Ibu Etty.
Good morning.
Director of, Consumer Banking, Pak Adhipo.
Morning, everyone.
Our Director of Corporate Banking, Pak Ariko.
Morning, everyone.
I would like to mention a few points before we get started. First, for everyone joining us on the Zoom call, I would strongly encourage you to download a copy of our presentation materials currently available either from the investor relations page of Bank Rakyat Indonesia, 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 so you can ask your question. I would now like to invite Pak Hery, our Group CEO, to begin the meeting.
Thank you, Siaga. Good morning, everyone. Let me start with to introduce the board of directors members here. As approved at an extraordinary shareholder meeting on December 17, 2025, BRI has welcomed several new members to our management team. I'm pleased to introduce five new directors, each bringing deep experience and also strong execution capabilities. Ibu Vivi in my left, yeah, actually used to be the Directors Finance Strategy, and then again, a new role as Deputy Group CEO of BRI. Second one is Pak Ahmad Royadi, who are with us in my right. Now he's the Chief Financial Officers atau CFO, our CFO, yeah. Ibu Etty Yuniarti, the Directors of Risk Management. Maybe the camera can spot Ibu Etty. Previously, SRVP of Retail Risk.
Pak Aris Hartanto, Director of Consumer Banking, formerly the CEO of BRI Life. The last one is Pak Mahdi Yusuf, Director of Legal & Compliance, formerly CEO of Bank Lampung. The rest of our director remain unchanged, ensuring continuously and also stability alongside this new appointment. First of all, before discussing our result, I would like to give you some color on the current update on the macroeconomic environment. Indonesian GDP remained resilient at 5.1% year-on-year in 2025, with household consumption continuing to support the growth. Investment gross fixed capital per-formations accelerating toward the end of 2025, signaling improving business activity and also capacity in branch expansion, particularly in more formal sectors with a stronger contribution to overall GDP.
Consumption patterns became increasingly selective, with stronger growth in transformation and communication and restaurant and hotel, while basic goods remained relatively more moderate, indicating demand grew toward to upper middle segment. This shift is also reflected in funding trend, where industry deposit growth was primarily driven by the upper middle segment, while smaller balance deposit expanded more modestly, pointing to slower recovery in the lower income segment. During this resilient yet uneven growth, policy support play an important role in sustaining status stability and also improving liquidity conditions. Macro economic stability remained intact despite IDR volatility, with inflation maintained at around 2.9% year-on-year and ample FX reserve, allowing Bank Indonesia to maintain supportive stance.
Fiscal spending accelerated in 2025, reaching around IDR 3,400.50 trillion with a clear four, quarter 2025 ramp up supporting domestic demand and liquidity. To support the more inclusive recovery, the government rolled out additional fiscal stimulus of approximately IDR 30 trillion in October, including cash transfer to 35.1 million household and expanded internship program, which accelerated fiscal disbursement in fourth quarter 2025, expected to support domestic demand into 2026. Policy rate were cut to 4.75% and held through year-end, with lower SRBI issuance improving liquidity and policy transmission. Purchasing power began to recover fourth quarter 2025, led by upper income segment with early stabilization below the fiscal support took effect.
Our grant full stack in indicate a pick up in MSME activity toward year-on-year, supported by seasonal demand during Christmas and New Year. Subsidized and also cash assistance disbursement in fourth quarter and higher government spending ahead for fiscal year end 2025. Overall fiscal monetary conditions has improved liquidity condition entering 2026, supporting BRI micro and retail branches with disciplined growth and prudent asset quality. BRI remain well positioned to capture emerging tailwind while maintaining prudent amid global uncertainties. Ladies and gentlemen, while we take a look the banking system Indonesia. Indonesian banking sector remains stable, with a loan growth at 9.6% year-on-year in 2025, gaining momentum since mid-year alongside improving business conditions and recovering credit demand. Growth remained in the highest single digit range, reflecting discipline underwriting.
Deposit expanded steadily, keeping industry LDR in the mid-80% range and indicating balanced liquidity. Profitability stayed resilient with net interest margin at 4.6%, while asset quality remained manageable, while gross NPL ±2% and LAR less than 10%. Capital level remains strong with the capital adequacy ratio in the mid-20% range, underpinning system resilience. Compare the industry, BRI recorded a relatively stronger loan growth and also structurally higher NIM and supported by solid capital level. While asset quality is still normalizing, risk indicators continue to improve and remain well managed. In this operating environment, we remain committed to continue our transformation focus on the 2 key priorities. Number 1 is transform in the funding franchise. We explain this one a lot with you guys and the analysts, you know.
What we have done so far, yeah, we have to optimize digital channel to increase business engagement and also transaction intensity, driving CASA growth. Different cross-segment and subsidiary collaboration through integrated product bundle, high quality payroll with better average balance, and also ecosystem-based solution. Better capture operating account, payroll, and also supplier transaction. We also strengthen retail and wholesale synergy to accelerate low cost funding growth. In regard of core repayment, also accelerate new engine. Core repam is in line with the micro and SME and new engine is which is the consumer banking. In 2025, we have significantly strengthened our micro business process, improving underwriting quality. As a result, the 2025 vintages are tracking better than 2023, 2024 cohort, which are expected to like, largely resolve by 2026 for 2023 vintage and 2027 for 2024 vintage.
By 2027, the portfolio is expected to be predominantly consisted of the batches originated under the enhanced credit standards, supporting stronger asset quality, lower Cost of Credit volatility, and a more sustainable profitability. In consumer, we have strengthened manpower, distribution, and business process with accelerating payroll penetration through higher ATB acquisition, improving borrower salary profile, refocusing mortgages toward tier 1 developer and higher income segment, and capturing payroll flow from commercial and corporate client to enhance a cross-segment synergy. Overall, we aim to structurally improve our funding mix and asset quality while scaling new growth engine to support more sustainable performance. Strategic initiative execution remain our key priority through dedicated PMO across micro, consumer, SME and 1 BRI solution, human capital and also operation to ensure disciplined implementation. Network and digital optimization to enhance productivity and consumer experience within a stronger transaction ecosystem.
Strengthen micro risk management, accelerated consumer growth, including gold bonding and also auto loan, and expanded commercial and corporate capabilities to different ecosystem penetration and also support CASA generations. As part of our strategic priorities, we continue to execute initiative in retail funding transformation and also asset quality improvement, both of which have begun to deliver early results. For initiative in the retail funding update, transforming funding franchise, merchant ecosystem revitalization through business cluster acquisition and key anchor merchant has added 69 clusters, expanding market share and increasing the transaction velocity to support CASA growth. Lifestyle-driven CASA campaign in selected urban cluster have enhanced transactional balance and strengthened merchant stickiness. Network capability enhancements across branches and micro unit to standardize service quality and also improve customer experience, supporting scalable ecosystem growth. Strengthen cross-subsidiary collaboration to deliver bundle integrated offering.
In terms of initiative in asset quality improvement a bit, we would like continue strengthening the 3 key pillars to reinforce underwriting discipline and asset quality. Enhance loan officers training and recruitment, added around 1,500 dedicated field collection staff, and redesign role to improve recoveries and also overall asset quality oversights. We also centralized and prescreen credit pipeline with automated monitoring to enable faster risk detection and complemented by local loan officers' expertise. Refined prescreening tool through sectoral and also regional risk model, strengthen scoring and risk acceptance criteria, and enhance sector guidance to improve risk selections. We also continue to monitor and optimize digital channel performance, such as BRImo on mobile banking. Business merchant QRIS, also remain a key driver for retail CASA growth.
BRImo, in terms of numbers of user increased by 18.9% year-on-year, reaching 45.9 million, with a 57.8% penetration rate. More importantly, we see improvement in monthly active user from 17.8 million active user to 20 million, increased by almost 18% year-on-year. Also the financial transaction increased by 29.5% year-on-year, and transaction value grew by 26.4% year-on-year. Business merchant and QRIS also in terms of numbers for the productive merchant business rose 3.8% year-on-year, while sales volume per merchant grew 19.8% year-on-year, supported by our merchant engagement initiative that strengthen usability, trust, and also transaction adoption. Our QRIS sales volume also increased by 100% year-on-year, and the numbers of transaction grew by 127.5% year-on-year.
That mean our retail transaction initiative has helped us to drive higher money circulation within BRI ecosystem and driving CASA and lowering funding costs, supporting a more efficient funding structure. Ladies and gentlemen, moving forward, we aim to diversify our income sources by expanding customer banking through several initiatives, yeah. We increase penetration among ATB customers while driving growth in high quality payroll concepts from the corporate client lead. Strengthen BRI Finance dealer integration, and implement fast-track underwriting to improve SLA. We also expand selectively through Tier 1 developer partnership to enhance yield and maintaining also strong asset quality. We also continue scaling Pegadaian integrated gold ecosystem, reinforcing group collaboration, cross-referral flows, and also ecosystem-based growth. Institutionalize regional wealth management team to collaborate across the segment, deepen product penetration, and also drive fee income, CASA risk, and also the Fund Under Management growth.
In 2025 and into 2026, commercial and corporate segment will serve as our tactical focus, emphasizing sustainable growth and transaction-led relationship. For commercial corporate client, we are prioritizing transaction banking relationship to drive higher quality CASA and recurring fee income. Our focus remain on resilient and structurally expanding sectors where transaction in intensity and ecosystem depth are stronger, supporting better risk selection and more sustainable portfolio growth. In the commercial segment, the top 3 sectors are energy, construction, and trading, with around 20% of the total commercial growth linked to the state budget and government-related project. In the corporate segment, in the strongest year-on-year growth has been driven by agriculture, energy, and also electricity. We are deepening penetration across supplier, distributor, employee ecosystem, connecting corporate and commercial client with other segment through payroll services, supply chain financingCash and cash solution.
This ecosystem approach enhance CASA capture, strengthen cross-segment synergies, and improve deposit intensity. We continue to monitor and drive the growth of the second engine in consumer and gold business, lending and serving by focus on the quality, customer and proving portfolio transaction. For consumer business, consumer loan, yeah, grew 10.6% year-on-year, driven by payroll that was up 9.9% year-on-year, and mortgages that increased 13.3% year-on-year. With growth focus and higher quality borrower, higher balance private payroll customers and also selective Tier 1 developer exposure. For auto loans, rose to 166.4% of the low base, yeah, because this, we just started, yeah, this auto loan business. Growth is being directed towards stronger segment within the BRI Group ecosystem through integrated underwriting and dealer collaborations.
Fund Under Management increased 18% year-on-year, supported by deeper cross-segment relationship. Fee income will be further enhanced through expanded investment offering, stronger wealth management execution, and improved cross-referral across segment. For the gold-based business, gold installment loan up 305.9%, targeting high-net-worth individual customers. Also gold saving up 66% year-on-year, with active customers increasing 46.9% year-on-year, supported by expanded sales channel, B2B transaction, and cross-selling to BRI group customers through BRI extensive distribution network. As of December 2025, financial performance saw gradual improvement compared to the September 2025. Total asset grew 7.1% year-on-year, supported by loan growth of 12.3% year-on-year.
The third-party fund increased 7.4% year-on-year, driven by strong CASA growth of 5.7% year-on-year. Both current and also savings account continue expand, reflecting the positive impact of retail funding initiative and improving liquidity condition. Fee and other operating income rose 2.6% year-on-year, supported by strong gold sales at Pegadaian, higher fee-based income, and a treasury performance. Recovery income improved in quarter four, 2025, rising 12.2% quarter-to-quarter, driven by accelerated call collection initiative, both claim and also the non-claim. PPOP increased 2.6% year-on-year, and 15.4% quarter-to-quarter, supported by stable loan yield, lowering funding costs, and well-managed operating expenses. Net profit declined 5.3% year-on-year in 2025.
However, it is important to note that 2024 included one of non-loan provision reversal of IDR 4.8 trillion related to the restructuring scheme costing on construction company. Talk about the key metric tracking are expected as we remain in the bad debt resolution phase. However, we started to see gradual improvement in PL and also SML in fourth quarter 2025. While profitability metric face challenges, core earning remain robust, supported by strong retail funding growth and increased contribution from subsidiaries. Reported net interest margin stood at 7.8% in December 2025, above our guidance, supported by a meaningful improvement in funding costs as the cost of fund declined by 20 basis points year-on-year, driven by strong increase in CASA balance and balances of mobilization.
Loan at risk declined to 9.6%, falling below 10% for the first time since the pandemic. While LAR, or loan at risk covered, was maintained above 50% at 56.8%. Cost of credit was 3.35% of December 10, 2025. Profitability metric improved quarter-to-quarter as return on asset improved 19 basis point quarter-to-quarter, and ROE also improved 102 basis point quarter-to-quarter. 2025 delivery and also 2026 guidance. Turning to our guidance, we deliver mostly in line with our 2025 target, except for cost of credit, where we front-loaded provision to accelerate it, the cleanup of legacy micro loan and start to add provision for disaster impacted region in Sumatra.
This reflect our conservative stand amid still an event demand recovery and allow us to enter 2026 with a cleaner book and also lower Cost of Credit pressures. Loan growth 2026, we guide loan growth of 7%-9%. Reflecting a high base from a large corporate disbursement in Q4 2025, 5.8% quarter-to-quarter growth. Growth is expected to be driven preliminarily by consumer, commercial, and also corporate segment. Net interest margin, 2026, we guide NIM at 7.4%-7.8%, assuming further rate cut, fewer rate cut of 1 to times and more normalized liquidity environment compared to 2025. For 2026, we get Cost of Credit at 2.9%-3.2%, supported by continued normalization in micro asset quality.
In 2025, net NPL downgrade improved sequentially each quarter, bad debt intake declined and SML trend improved, indicating a narrowing risk funnel. Write-off should also moderate as part of the IDR 2 trillion 2026 write-off budget was already accelerated in 2025. The upper end of the guidance reflect prudence and considering potential risks such as food price volatility, pressure on lower income purchasing power, and broader macro uncertainties that may affect the newer micro vintage. For cost-to-income ratio, for year 2026, we're maintaining guidance at 41%-43%, reflecting disciplined cost management while continuing to invest in the loan officer productivity, loan monitoring, and also collection effectiveness, IT, OpEx to support the business growth. I would like now to turn the call over Pak Royadi, our new CFO, to discuss our financial in more detail. Pak Royadi, please, your turn.
Thank you, Pak Heri. Let me now walk you through our financial performance, starting with the balance sheet. Like mentioned by Pak Heri before, total asset growth was 7.2%, supported by loan growth of 12.3%. At the consolidated level, contribution from Pegadaian and PNM reached 11.6% of total loans, increased from 9.9% a year ago, supporting overall loan growth, particularly in the micro segment. Loan and financing provision grew 2.5% year-on-year, as we maintain provision level, we're also utilizing reserves built during the pandemic to absorb bad debt write-offs. Provision levels remain elevated at 5.46% of total loans, compared to around 4.1% pre-pandemic level.
On the funding side, deposit grew 7.4% year-on-year, supported by strong 12.7% increase in CASA, where our leverage modestly increased to 6.5 times in 2025, increased from 6.2 in 2024. Next, we move to funding structure. We continue to see gradual improvement in the mix, supported by internal initiative and a relatively supportive liquidity environment. Total deposit grew 7.4% year-on-year in 2025, driven by solid CASA growth of 12.7% year-on-year, bringing the CASA ratio to 70.6%. This is the level of all-time high for BRI in term of the CASA ratio. While the improvement partly reflects a more favorable system liquidity backdrop, we also continue to execute initiative to structurally strengthen CASA across segments.
We began to see improvement in cost of fund from the end of 3rd quarter 2025, supported by improvement system liquidity following monetary easing, as base effect rate cuts typically transmit with a lag. Repricing become more visible starting in 3rd quarter. The decline was mainly driven by time deposit costs, which fell quite significant, 58 basis point QoQ, as competition ease. Current account and saving costs remain saving account costs remain relatively stable. Saving grew strong at 4.4% QoQ, while saving costs increased only 3 basis points QoQ, keeping our total saving costs below 50 basis points. This reflects a healthier funding mix and disciplined pricing supporting margin resilience.
If we discuss further about savings, our structures relatively align with the overall system liquidity structure, where balances remain concentrated in the upper tier affluent segment, ensuring we are positioning where liquidity growth is the strongest. Total savings increased by 7.8% year-on-year in 2025, primarily driven by affluent segment, which grew 44.7% year-on-year or grew quite significantly, outperforming other peers and reflecting successful penetration in the higher value customer. Within the affluent segment, the strongest growth came from balances above 5 billion, which expanded by 199% or double, consistent with broader micro liquidity trends and improved wallet capture. On the sidenote, we also observe improved funding retention trend.
If you see in this graph, with monthly average balancing surpassing the prior years, year-end level earlier in the year, indicating stronger stability and stickier deposit behavior. Next. For loan mix composition, micro remains the largest contributor, accounting for 42.6 of total loans. This is followed by corporate 22.5%, SME 15.8%, consumer at 15%, and commercial at 4%. Micro lending remains soft, with Kupedes contracting by 12.2% year-on-year, reflecting ongoing portfolio consolidation and continued focus on asset quality and recoveries. In contrast, consumer, commercial, and gold founding segments supported overall growth, driving the total loan increase 5.8% Q-on-Q and 12.3% year-on-year. Since we want to improve our capability to serve other segment, we also reiterate that we will continue our dominance in micro business in Indonesia.
We are on the process strengthening the business model in micro so that it will be more fit going forward with the maintained asset quality. Despite portfolio mix shift, margin pressure was well contained. Loan yield remains stable at around 13%, supported by higher contribution from Pegadaian and PNM. Their share within the micro segment in a consolidated basis increased from 21.6% to 27.2% in 2025, and their contribution to total consolidated loan also rose from 10%-11.6%, supporting overall yield resilience. Next. To provide more color on commercial and loan growth was well diversified, with the top three sector contributing 43% of 2025 disbursement, led by state budget related project, energy and construction. Around 56% of disbursement were linked to value chain ecosystem.
This is our goal, while 44 came from total regional sector players. Loan utilization lean more investment financing indicated project structure and capacity expansion. Meanwhile, corporate growth was driven mainly by agriculture, energy, and electricity. In parallel, we have begun gradually developing value chain-based financings across several ecosystem, focusing on selected anchor clients and their upstream and downstream partners. We're still in early stage. This approach is designed to create a more integrated banking relationship, unlocking cross-segment opportunities such as higher quality parallel account within customer, generating more stable and granular funding flow, and improving transaction visibility. Over time, this ecosystem-based model is expected to enhance relative, relationship depth, improving risk monitoring through better cash flow transparency and support more suitable portfolio growth. Next.
As highlighted earlier, our focus on strengthening funding quality, improving deposit composition, and maintaining disciplined lending and translating into margin resilience. Our consolidated NIM, like, mentioned by Pak Heri before, which is 7.8% in December 2025, remaining resilience despite asset quality pressure and portfolio mix shift. This was supported by disciplined cost of fund management and strong subsidy growth, particularly from Pegadaian, that grew quite significant, 48% year-on-year. Consolidated lending yield softened slightly Q-on-Q due to portfolio balancing. However, continued funding mix improvement is expected to support cost efficiency and margin stability. Despite a tighter liquidity outlook in 2026, we expect cost of fund remain broadly stable. Our LDR stood at 91.6% versus 86.5% in 9/9/2025, reflecting the balance sheet optimization.
Running asset, total asset increased year-on-year with liquidity prudently managed with our LDR targets 90%-92% and supported by stable retail cash flow. Now we move to P&L. In 2025, our net interest income grew 5.5% year-on-year, supported by stronger yield contribution from PNM and particularly Pegadaian, whose share within micro increased 21%-27.2%, and also improvement in better cost of fund. Loan yield remains stable at around 12.9%. In term of non-interest income, it rose 2.6% year-on-year, driven by higher fee income, strong gold sales, and significant treasury gains growth. Recovery income declined 17.4% year-on-year due to softer collateral collection. With new initiative, additional fee collection staff in place, early improvement were visible in fourth quarter 2025.
Recovery rates, we expect to normalize to 50%-56% in 2026. Operating expenses increased 7.7% year-on-year. Cost-to-income ratio relatively stable at 42.5% or within the target. PPOP grew 2.6% year-on-year, but in terms of the Q-on-Q, it is grew quite significant, 15%. Net income declined 5.3% year-on-year, mainly due to the absence of prior year one-off gains from non-loan provision reversal last year, yeah. Sequentially, however, PPOP and net profit rebounded, like mentioned before, 15.4% and 8.2% Q-on-Q respectively, indicating performing improving momentum that we expect to carry on into 2026. Next.
Non-interest income, interest, non-interest income increased, supported, like discussed before, the higher income, significant growth of treasury in transaction and net gold sales, benefiting from high gold price in 2025. Pegadaian strengthened its gold ecosystem through B2B partnership and deeper integration within the BRI group, leveraging BRI customer base and BRImo apps to distribute Pegadaian product more widely. As a result, net gold fee, income rose, quite significant to IDR 2.4 trillion. Loan recovery income was softer during the year due to lower collection earlier on, though improvement began to show in the fourth quarter 2025 following the additional off-field collection staff. We expect it is normalized to 50%-55% in 2026.
For 2026, we target our OPEX to asset ratio is 3%-4% and maintain cost to income ratio between 41%-43%, while we continue to add manpower to strengthen capabilities. Productivity improvement and ecosystem cross-selling are expected to keep costs manageable and support sustainable earning growth. Next. If we're talking about the capital composition, our CAR is still very manageable. Our total CAR is 23.5% and Tier 1 CAR of 22.4%. Over the medium term, we aim to gradually optimize our capital structure by bringing total CAR closer to 20%, supported by stronger loan growth. We plan also to continue high dividend division to shareholders, yeah.
The full year 2024 dividend payout was 86% that paid in 2025. For the full year 2025, we are currently finalizing the full year dividend with the intention to maintain higher than normal payout ratio, yeah. With our CAR level is above 20% and our growth is 7%-9%, going forward, we expect we can still maintain pay dividend higher than our normal, yeah. In full year 2025, we expect to maintain similar dividend payout schedule as the previous years and at least sustain the same dividend per share as full year 2024. With that, currently, I would like to turn the presentation over to Pak Akhmad, our Director of Micro, to share more on the ultra micro business segment.
Pak Ahmad, please.
Thank you, Pak Royadi. I will now elaborate on the performance and outlook of our micro segment. PNM and Pegadaian's contribution to consolidated micro loans increased to 27.2% in 2025, up from 21.6% last year. Pegadaian led the growth with 47.7% year-on-year increase, driven by 53.8% year-on-year rise in gold backed loan lending, supported by B2B expansion and deeper integration within the BRI group's ecosystem, including distribution through BRImo. BRImo contributed 6.4% of total Pegadaian gold savings and the newly launched gold installment product in 2025, also in collaboration with BRImo, has generated around 12,000 accounts to date. Meanwhile, PNM growth moderated to 0.4% year-on-year, broadly in line with BRI's overall micro performance.
This high Pegadaian's growth supported stable micro yields at 18.2% and lifted PNM and Pegadaian's contributions to consolidated net interest income to 22.5%, up from 19.1% a year ago. As mentioned by Pak Hery before, gold backed loan lending and savings will continue to serve as part of new engine of growth. For 2026, we expect Pegadaian to maintain steady but more normalized growth as gold prices are likely remain elevated, but with more stable price momentum compared to 2025. Structural demand for gold remains supported by global uncertainty and portfolio diversification trends. Also, stronger global growth and Dollar index strength could moderate upside.
Meanwhile, BRI Micro is expected to return to positive despite still limited growth, supported by lower write-offs, improved productivity and business processes, and a gradually improving operating environment, including continued government support programs. At the same time, we are deliberately moderating growth at PNM as Cost of Credit remains elevated, prioritizing asset quality over expansion. Microloan growth declined by 4.2% year-on-year in 2025 as we continue to focus on asset quality, collections, and funding. This included strengthening operation by adding supervisors in all micro units, deploying field collection staff for written off loan, tightening underwriting standards, and streamlining risk and operation across the micro segment. Micro payroll loan or BRIGuna started to have positive growth at 0.1% year-on-year in 2025, with disbursement up to 11.4% 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 in all BRI unit of around 450 staff since July 2025, and stronger partnerships with civil servants, military, and police. These partnerships expand reach into rural areas where BRI's micro network is already strong there. KUR maintain healthy growth of 1.8% year-on-year. Meanwhile, Kopdit's growth was subdued as we continue to clean up the 2023 batch and resolve legacy COVID restructured loan in 2025. Borrowers per loan officer decreased further to 456 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 IDR 17.9 billion, which productivity expected to increase as we execute on our micro transformation agenda. To strengthen the micro foundation, we are focusing on three key areas. First areas is human capital that we strengthening organizational capabilities through extensive reskilling and retraining programs, redesign recruitment and career journey, and the remodeling of micro loan officers' roles to improve productivity and credit discipline. The second focus is business process that by enhancing credit culture and operational discipline while optimizing daily workflows to improve efficiency and control. In risk management, we advance credit risk management to improve credit scoring models, strengthen underwriting processes, and edit field collection to ensure better collection. Now I would like to turn the presentation over our Director of Risk, Ibu Etty, to discuss our asset quality perspective.
Thank you.
Thank you, Pak Achmad. I will read my notes to make sure that all concern will be answered. Moving into loan quality, our consolidated NPL increased by 30 basis points year-on-year from 2.78% to 3.07%, driven by increasing the only NPL by 35 basis points from 2.94% to 3.29%. In the bank only, the increasing NPL was by design as a result of soft lending strategy in micro, SME, and commercial segment. The increase was partly offset by lower NPL ratio in corporate segment by 106 basis points year-on-year. In the micro segment, NPL formation remains high as 2023 Kopdit batch matures. Near term NPL may remain elevated as expected NPL formation for this year, roughly 5% compared to 2025, so 5% lower.
I will explain later in the section of Kopdit 2023 as well. We see slight optimism in 2026 as asset quality trends have improved sequentially in 2025, and our SML ratio has improved by 60 basis points year-on-year to 5.6% and 12 months rolling loan at risk formation has improved as well, roughly 20 basis points from 1.9% in 2024 to 1.7% in 2025. Into the consumer segment. Increasing NPL mainly driven by two factors. One is mechanical. It is because of in the third quarter, we implement the single debtor principle that raised the NPL Q-on-Q by 25 basis points. Secondly, on the year-on-year basis, we also done some soft lending in the mortgage product.
We increased the NPL downgrades and by roughly 60 basis points to 3.9% NPL ratio by end of 2025. The downgrades mostly coming from developer non-Tier 1, especially in Jakarta, Bandung, Surabaya, and Jogja area. These are the loans with average house price below IDR 500 million. Hence, since the third quarter last year, we already reduced the number of eligible developer from above 2,300 names to around 1,300 names, and we still do on progress on reviewing these developers. Secondly, we also lower mortgage approval limit for our regional CEO from IDR 25 billion to IDR 15 billion. Three, we also implement new risk acceptance criteria, such as minimum income threshold for certain products as part of preparing mortgage product as one of our new engine of growth in 2026 going forward.
In the small medium segment, NPL increased by 60 bps or IDR 1.7 trillion to 5.5%, driven by legacy pre-COVID disbursement, which account more than 30% of the NPL composition right now, especially coming from region of Jakarta, Semarang, and Jogja. The NPL ratio in SME is still sticky above 5% level, although we already use around IDR 11.7 trillion write-off budget to absorb the downgrades. In commercial segment, as we prepare the segment to grow, we start to clean up the legacy loan. SML ratio improved from 1.9% to 1.2%, but NPL increased by IDR 1.6 trillion from 2.5% to 4.3%.
In our subsidiary business, although seem a small improvement of 3 basis point, actually our two biggest subsidiaries has shown significant improvement in loan quality. First is Pegadaian . NPL improves by 25 bps year-on-year from 0.63% to 0.37%. PNM also improved by 60 bps from 2.3% to 1.7%. LAR ratio also improved significantly in PNM, especially from 13.7% in 2024 to 8.5% in 2025. Moving into next page. In terms of provisioning appetite, our loan provisions stood at IDR 83.1 trillion, equivalent to loan loss reserve of 5.5%, much higher than pre-pandemic level of 4%.
In 2025, as our loan at-risk ratio improved by 110 basis point from 10.7% to 9.6%. The composition of NPL portfolio to total loan at-risk is increasing from 26% to 32%. We still maintain our coverage ratio of NPL above 170%, and coverage of LAR ratio to around LGD level, which is 55%-60%. Regarding provisioning policy toward disaster impacted area that happened in North and West Sumatra, we already allocated IDR 327 billion as an overlay on top of provision generated by model. The specific overlay increased bank-wide CoC around 3 basis point.
Based on our assessment from the regional team, total portfolio impacted will be around IDR 2.2 trillion, consisting around IDR 1 trillion in KJU, IDR 200 billion in Kupedes, and around IDR 1.1 trillion in small segment. We still do the mapping until end of March. As of December, we already restructure around IDR 440 billion, and most of the loans still in current collectability. Moving into next page. Regarding the CoC, with previous loan quality condition and provisioning appetite, our gross CoC stood at 3.35% in December 2025, up by 12 basis points year-over-year. Due to lower insurance claim and weaker recovery in micro segment, our recovery income declined by IDR 4.4 trillion from IDR 25.4 trillion to IDR 21 trillion. Therefore, as a result, net CoC increased by 55 basis points to 1.9%.
Last year, in the fourth quarter, we had set up dedicated group for retail collection, handling micro recovery for written off portfolio and move also the responsibility to collect in the SML consumer collection from the business side to our risk management side, which is under retail collection group as well. As of December, we already recruit and train around 1,500 field collector dedicated for written off recovery, within 2 months, we were able to collect roughly IDR 250 billion non-claim recovery. In March 2026, this year, we plan to install new collection system as well with mobile collection capabilities to make us easier in tracking our field collector productivity, as well as monitor their operation. We understand that social issue may arise from these changes of new business model.
In 2026, we plan to upscale the capabilities in collection and recovery up to covering all the BRI unit portfolio of written off loan. We may recruit until 5,000 field collector. Last page, regarding loan quality, we would like to explain about the progress in Kupedes 2020 bookings, as everyone is concerning about it. The total booking of Kupedes at that time is IDR 202 trillion, and as of December 2025, IDR 153 trillion has fully repaid, while IDR 13.4 trillion has been written off. Remaining outstanding in the balance sheet is IDR 35.4 trillion. Out of this portfolio, IDR 14 trillion is under LAR category, IDR 4.5 trillion is within the LAR category is in NPL category. Remaining IDR 21.4 trillion is under current category.
If we look at the average run-off in the fourth quarter last year, which is IDR 2.6 trillion per month and projected write-off around IDR 6 trillion until maturity, we expect that the remaining outstanding will be maturing in 2026. The second riskier segment that I would like to explain is also about the Kupedes 2024 booking. We booked at that time IDR 126 trillion, and as of December 2025, the remaining outstanding in our balance sheet is roughly IDR 49.6 trillion. We already written off IDR 1.6 trillion. Of the remaining IDR 35.8 trillion is still under our current category.
We expect that most of the portfolio will be maturing in two years, which is 2027, with projected return of portfolio around IDR 11.7 trillion, or another IDR 10 trillion in two years. That's why I'm explaining before that, in terms of NPL downgrades, maybe in 2026 will be only slightly lower. For LAR formation, we already see much better improvement. In 2025, we have done several business process improvement in the fourth quarter, such as set up new RAC and pipeline model, limiting Kopdit Rakyat risk grid, limiting maximum top up, and also setting the top up criteria. We are seeing better performance from Kopdit in 2024 bookings, and further improve in 2025 bookings.
As mentioned here in the presentation on the right bottom side, average SML formation for six months on book has shown improvement from 6.3% in 2023, lower into 5% in 2024, and then further lower into 3.9% in 2025. I think that's all from me. Now I would like to turn the presentation back to Siaga to organize Q&A.
Bu Vivi, just wait.
Okay. No worries. Okay. Hi, everyone. Before I summarize the presentations, I would like to touch a bit about ESG. We continue to operationalize ESG at scale, enhance government discipline aligned with IFRS standard, and ensure sustainability is embedded across process and decision making. By 2030, our aspirations is to position Rakyat as a sustainability leader in Southeast Asia. To summarize our presentations this morning, this year reflects discipline execution in normalizing cycle. We deliver sustained balanced growth, strengthen operating performance, and preserve profitability. Our margins remain resilient, our funding base disciplined, and our capital position strong. As you might know, growth during this year was supported by tactical momentum in selected segments, particularly corporate and commercial. However, our foundations remains unchanged.
Rakyat continue to be anchored in MSME, especially micro, the segment that has defined our purpose and shaped our resilience across decades. At the same time, as you can see in this slide, our aspirations to become one bank for all is not about shifting identity. It is about building capability across segment. It is a deliberate strategic evolution. It's not about changing who we are. It is about expanding what we are capable of. By strengthening capabilities across all segment, particularly in retail funding and transaction banking, we are building a more stable, diversified, and efficient funding structure. A stronger funding franchise enhance our resilience, improve cost efficiency, and enable sustainable growth across every segment we serve. Universal capability strengthen our core. It allow us actually to support micro customer ecosystem as they grow into small business. Rakyat will grow together with Indonesia.
We are not pursuing growth at any cost. We are building durability, we are building capability, and we are building trust. In the end, sustainable value creation is not about one strong year. It is about building an institutions that can thrive across cycle, generation, and transformations. We are building a stronger and more balanced BRI, one that can navigate cycles. We have strong fundamentals, disciplined execution, and clear strategic direction. We remain confident in our ability to navigate change, capture opportunities, and deliver long-term value for our shareholders and for the nations. Thank you so much for your trust, your constructive feedback, and your patience, especially during more challenging period. Your support strengthen our resolve to continuously improve and deliver sustainable value for all stakeholders. Now, I would like to turn the presentation back to Siaga to organize the Q&A session.
Thank you, Bu Vivi. Now we'll move on to the Q&A session. First, maybe I will proceed by choosing one question from the chat box that will respond it, and assigned by Pak Hery. The first question came from Melissa. The question regarding the update on the KUR insurance scheme, whether we already have the new scheme or not.
Yeah. Yeah.
Second one is the CoC outlook regard, you know, relating to Pak Heri mentioned before that by 10/7 we would have greater portfolio in micro. The third one is the scenario which BRI could hit lower end of guidance for CoC or reach or exceeding the CoC guidance for 2026. Pak Heri.
Melissa, thank you very much for the questions. I think, Bu Vivi, you can respond the questions from Melissa.
Okay. Thank you very much, Melissa, for your questions. As of now, we are still using the existing scheme for KUR insurance policy. Of course, there are many discussions on the premium rate and also the coverage of KUR. About coverage, we are talking about the similar existing condition, 70% covered, or probably could be limited, 50% covered. For the premium rate, it is still using 1.75%. For KUR micro, it could be increased, stay or could be increased up to 50 to 75 basis points. Still, it is become our discussions with the credit insurance company. The second one is about the CoC. The currently micro segment CoC remain elevated around 4.7 level, still above our pre-pandemic level.
I think, if we exclude the CoC of Kopedes 2023, our micro CoC as of December is like 68 basis points lower. When we are talking about CoC in the longer term, we are expecting somewhere around 2.5%-2.7% around 2030. Assuming gradual improvement, like Bu Etty mentioned previously, probably we will still consider in the this year and next year, probably still consider relatively flat net downgrade NPL. After that, if net downgrade to NPL in micro, for example, consistently below 2%, so we are expecting 2.5%-2.7% in the longer run.
Thank you, Bu Vivi. For the second question, I will invite one of the participant who raised his hand, Harsh Modi. Could you please unmute yourself?
Yeah. Hi, thanks a lot.
Okay. All right. Bu Vivi, it's yours.
Okay. Thank you so much, Harsh, for your questions. Yes. I mean, in the last 1 year, our saving account composition skewed toward higher net worth. If the liquidity tightens in the next 12 months, this is basically saving account, Harsh. We are able to achieve higher compositions in a higher net worth, not only about pricing. Our saving account costs or the cost of saving account currently roughly around 30 to 50 basis point. Because we are able actually to gain more trust from our priority customers because in the last 1 year, we fixed a lot of business process and services to our high net worth customers.
To your point that if the liquidity tightens in the next 12 months, probably it will be more relevant if we are talking about time deposit customers, especially for the wholesale client. Important in terms of liquidity. Thank you so much, Harsh. In our saving account, the special price, taking into account probably only, like, 10% to 20% of the total savings. It's really, really small actually, Harsh. Okay, thanks. The jump in fees and corporate, let's say, over the next two years between.
Yeah. before goes to Pak Riko, yeah, I would like to give you a color. Basically, the lending purpose structures within the banks, we cap, you know. The wholesale banking is maximum 20%. The rest composition is including micro, SME, and also the consumer. Pak Riko, you can respond the question.
Yeah. Thank you, Pak Hery, and thank you, Harsh, for the questions. Let me give you some colors in the corporate portfolio going forward. What we are focusing is actually rebalancing with the higher quality of the corporate portfolio. Which means also, we are actually looking for a corporate transactions, not only for lending, but we also make sure that we have the opportunity for cross-sell for across the supply chain to the down below of the supply chain, up to the 1 km. The other part that also very important to enhance the profitability of the corporate portfolio is actually the cross for the transaction banking.
This year, in 2025, we really focus in transforming our transaction banking with our digital platform, Qlola, which actually increased quite significantly in terms of the active users, also the sales volume. This really connecting all the transaction banking with all the lending portfolio that we have to enhance the profitability of the portfolio. Hopefully that's answer your questions. Thank you.
In addition-
Sorry, can I just.
Sorry.
Yeah, just want to...
Yes, of course, Harsh. Is, you know, what we are focusing is, of course there is, there's a portfolio that does not make sense in terms of profitability. We should be able to actually walk away basically or price out from the transaction. We also see that, you know, as an overall holistic opportunity. For example, in the corporate side, we see that the, we have, for example, a very or quite a thin margin, where we see the impact of the holistic supply chains, right. We see how much we can actually derive the transaction from the suppliers of that corporate transaction. For example, their suppliers, their distributors.
There are also the, let's say in agri-agribusiness, we also look at it up to the farmers' ecosystem. We look at the holistic enterprise profitability for specific transaction. That's how we decide whether we enter the portfolio or not. Thank you, Harsh. Bu Vivi, you wanna add?
Just to add, like, a little bit more color, Harsh, on the profitability of corporate segment. Currently, the return on asset of corporate segment, 2.6% until 3%. The positive side of corporate segment, actually they are bringing low-cost funding for Rakyat as well. Therefore, the return on asset is quietly close to the average of the bank-wide. Of course, if you compare with micro, it's like, below micro. Responding to your questions, it's a very difficult questions actually to answer. Of course, as a part of SOE banks, we will not be able to straight say no for a certain loan that part of government program. If you remember how we manage KUR, that's exactly the same thing we will do in a corporate segment.
For example, KUR, we always negotiate every year to find a win-win solution for both parties. For all parties, actually, including the credit insurance. For KAD, KDMP, the cooperatives, the Agrinas thing, when the scheme switch into corporate loan, actually the ROA is better off rather than the cooperative dispersed in the mass market. Thank you so much, Harsh.
Thank you.
Pak Royadi, maybe you add, in term of the, trajectory of the. Yeah. ROA.
Yeah. Thank you. I just want to add, Harsh, like additional, like, Bu Vivi mentioned, basically the higher segment, the other yield, beside the total loan yield is higher. Like for example, corporate, maybe the interest rate, the loan yield only 7%, 8%. But if we combine with the, like, non-interest income, like fee-based income, and then like Bu Vivi mentioned, the deposit CASA, coming from this corporate. Basically, if we talking about the total yield, it will add like another 200 basis to 300 basis points. For example, the loan yield is 7%, the total yield coming from the CASA transaction fee income is relatively higher, around 200-300 basis points. Basically we have total yield, like, 8%-9%.
Thank you.
All right. Thank you, Pak Royadi. We go to the next questions.
Thank you, Harry. Actually, the next question came from the chat box regarding the outlook for the loan, the overall guidance for 2026, covering loan growth, NIM, NPL, and also cost to income ratio. To Pak Andrey Andrijanto.
Yeah. Okay.
Okay. Thank you, Pak, for the questions. I will walk through one by one, and Pak Royadi probably can add later. The first one is about the loan growth guidance. We guide you with 7%-9% loan growth. Assuming that micro on consolidated basis probably will grow to until 4%, while Pegadaian growth probably lower. This in 2025, they grew around 40%. In 2026, we are only assuming double-digit growth, while PNM actually is still same environment with Rakyat, low single-digit.
Consumer, as the new growth engine, we expect them to grow around 11%-13%, while commercial and SME hopefully will grow around 10%-15% and corporate around 8%-10%. For the net interest margin, we guide you with 7.4%-7.8%. There are several assumptions here. We are assuming that there will be improvement in cost of fund. For example, we are assuming our cost of deposit will be roughly around 2.8%-3% by the end of this year. We also taking into account, like we mentioned previously, if anything happens with the KUR premium coverage, we already also taking into account. That's why you saw...
you see the lower end of the NIM guidance around 7.4%. For Cost of Credit guidance, 2.9% until 3.2%. We are taking several assumptions. Of course, the higher end might. We might meet the higher end if, for example, there will be a policy, especially in disaster area, that the KUR in disaster area will be, should be what? Like, written off. So we have to add more provisions. The lower end actually is something that we can expect if consistently, for example, the net downgrade in special mention and NPL in micro consistently below IDR 2 trillion. Thank you.
Maybe Bu Etty, you would like give another color for the guidance for the Cost of Credit, you know. 2026, the guidance is lower than 2025. Little bit lower. Yeah.
Okay. Thank you, Pak Edi. Thank you for guidance regarding to loan quality and CoC. For CoC 2026, we guide for roughly 10 basis point lower compared to 2025. Last year, we expect that loan at this ratio continue to be lower, while the NPL ratio perhaps roughly like 10-20 bps lower as well, driven by better loan quality in the SME segment and a consumer segment, as well as the commercial segment, while the corporate segment continue to grow the outstanding as well. We also expect the ratio on the NPL also gonna be improved. The micro segment, as I mentioned earlier, the downgrades pressure is still there from Kupedes 2023 as well as 2024.
We also allocate relatively similar right of budget, around IDR 22 trillion for 2026. For the NPL ratio in 2026 for micro is still gonna be hovering around 3.9% to 4%. Thank you.
Thank you.
One more question, Pak, actually from Pak Andri also regarding the capital raising, Pak, in 2026, the dividend payment for 2,000.
Edi Susianto, the CFO, you have the guidance, the policy.
Regarding the dividend, payment, yeah. In general, with our total CAR currently 23%-24% and our ROE is like, 17%-18%, actually we can pay dividend infinite, around 50 basis points, 50% dividend pay. Again, because of our CAR is still 23.7%, way higher than our minimum requirement. Going forward, we can still maintain our dividend payout, at least similar than last year, around 80%, 85%, 80%, 90%. Again, we still finalize, waiting for the decision from our majority shareholders.
Pak Dipo, ada yang mau disampingkan? Pak Riko, enough? I think, thank you very much, yeah, for analysts and also friends, maybe around the world, you know, dial with us, yeah, this morning. Thank you very much for your support for BRI. Hopefully, even though the 2026 is not easy, quite challenging, we know the macroeconomic, global policy, something like third war, tension in politic and also et cetera, you know, I think we're still optimistic, maybe 2026 is better than 2025. Again, thank you very much. Hope to see you next 3 months, right? Next 2 months. Okay. All right. Back to Siaga.
Thank you, Pak Ari, for closing remark. I think, that concludes the meeting today. Thank you for joining us on the 2025 earnings call. Have a good day.