Good afternoon, ladies and gentlemen. I would like to welcome the respected investors and analysts. Thank you for joining PT Bank Danamon Indonesia Tbk Investor and Analyst briefing first half 2026 financial results. Before we begin, I would like to emphasize on the following information. We encourage participants to join this event by using laptop and use a headset to optimize the audio quality. Please ensure that you are joining from a closed room and quiet environment with a stable internet connection. During the event, please kindly mute your microphone and turn off your camera. Please also put your mobile phone in silent mode to avoid echo sound, and do not access the Microsoft Teams link simultaneously in more than one device.
When we enter the Q&A session, you can type your name, company, and question through the chat box menu, and I will read each questions and our BOD members will respond to your questions. Ladies and gentlemen, I would like to welcome and thank our respected investors and analysts for joining Bank Danamon's investor and analyst briefing for first half 2026 financial results. Today, I will be your host and please allow me to quickly introduce myself. My name is Marcella Tanamas, Investor Relations of Bank Danamon. I would like to welcome and introduce Danamon's Board of Directors and also President Director of our subsidiary, Adira Finance, who have joined from their respective locations. Bapak Nobuya Kawasaki, President Director.
Selamat sore.
Bapak Herry Hykmanto, Sharia and Sustainability Finance Director.
Selamat sore.
Ibu Rita Mirasari, Compliance Director.
Selamat sore.
Bapak Dadi Budiana, Risk Management Director.
Selamat sore.
Bapak Thomas Sudarma, Enterprise Banking and Financial Institution Director.
Selamat sore.
Bapak Jin Yoshida, Global Alliance Strategy Director.
Selamat sore.
Ibu Yenny Siswanto, Information Technology and Digital Director.
Selamat sore.
Ibu Theresia Adriana Wijaya, Chief Financial Officer.
Selamat sore.
Bapak Dewa Made Susila, President Director of PT Adira Dinamika Multi Finance Tbk.
Selamat sore.
We also would like to welcome Danamon's Board of Management, who also have joined from their respective locations. Ladies and gentlemen, before we present the detail of Bank Danamon's financial results for first half 2026, I would like to invite Bapak Nobuya Kawasaki as our President Director to deliver his remarks, highlighting the progress of our key strategies. Pak Nobu, the screen is yours.
Selamat sore, bapak dan ibu. I hope you are all in good health and thank you for joining today's investor and analyst briefing of the first half of 2026 Bank Danamon performance. If you flip to slide three, I will give you some situation of Bank Danamon, starting from macroeconomy and industrial update. The economy remains resilient, although GDP growth is expected to moderate into FY 2026 as tighter financial conditions and manufacturing input hindrance weigh on activities.
Bank Indonesia is expected to maintain a tight policy stance with rates potentially rising toward approximately 6.25% through FY 2026 to widen the yield spread and support currency stability. A higher or lower Fed rate environment continues to pressure capital flows and foreign exchange, even as U.S. rates gradually ease. The banking sector industry lending growth remains healthy and is projected to hold around double digit levels.
Funding is expanding at a slower pace with first half 2026 growth softer than in FY 2025. The lending versus funding gap keeps competition for deposits and NIM management as focus. Multi finance, the automotive sector showed encouraging signs of recovery in the first half of 2026. Both two-wheelers and four-wheelers wholesale sales rebounded significantly, supported by improving demand, government spending, and growing EV adoption. Momentum is likely to persist and stay positive for the end of this year.
Please flip to slide four. This is about Danamon's strategic overview. Our three-year strategic direction through our Grow as a Financial Group strategy, we remain focused on building a strong foundation for Danamon to continue delivering sustainable business expansion across our lines of business. We have set our 2024 to 2026 priorities comprising building dominance in targeted ecosystems, delivering unique MUFG propositions, and advancing data analytics and process improvements.
In parallel, we continue to focus on optimizing our business through foundation building in IT and digital infrastructure, people, branding, and branch network. In first half 2026, Danamon delivered solid performance with double-digit growth in both funding and lending, continued improvement in credit quality, and higher impact growth of 33% year-on-year. Let's move to slide five. This is about our strategic initiatives.
One is the automotive ecosystem. Automotive remains our key ecosystem. Synergy loan disbursement increased 31% year-on-year to IDR 2.2 trillion in the first half, powered by Danamon, Adira, and MUFG working together as one financial group. Our fifth consecutive year at IIMS Surabaya delivers strong results. Visitors increased 20%, transaction volume grows 29%, and exhibitors grow 13% year-on-year. Our 17th anniversary programs and customer gatherings deepen engagement across customers' entire value chain.
The regional-based ecosystem, we are turning local strength into regional ecosystem across retailers, SMB, and community foundations. Grassroot engagement and local partnership are growing our granular, low-cost funding base. Regional franchises give us diversified CD deposit and pipelines of new lending opportunities. Hajj and Umrah ecosystem. The key highlight was funding from pilgrims, travel companies, and BPKH, which surged 149% year-on-year.
The number of accounts grew 24% year-on-year, while the number of partner travel companies increased 23% year-on-year. Deeper ties with BPKH and associations have strengthened our standing in this fast-growing faith-based niche. Let's move to slide 6. Strategic initiatives continues. As an MUFG operational financial holding company in Indonesia, we are turning group scale into tangible synergies. Danamon serves as the holding company of MUFG's financial conglomeration in Indonesia.
As planned, PT Home Credit Indonesia shares, along with its control and consolidation, will transfer to Danamon in June 2026. The Adira-Mandala legal day one merger has been completed, with operational day one on track for completion in August this year. Joint events with local organizations introduce premium customers into the group. Shared CSR initiatives, including clean water program, blood donation through D'Club, and MUFG Gives Back help build one group brand.
Impact mentorship, batch two, is deploying talent across group entities. Now, let's move on to slide seven. Continuous initiative. One is D-Bank PRO. D-Bank PRO continues to show strong traction, with engaged user up 9% and transaction up 31% year-on-year. QRIS is going cross-border, now usable in China and South Korea with a new SAR currency feature and customer presented mode. Danamon Cash Connect supports business transaction across Indonesia.
The platform continues to show strong traction in user transaction and transaction volume. Branch network regional centricity is delivering results with 128 community events held across the region in the first half this year. These engagements are lifting both funding up 9% and loans up 7% year-on-year in the areas where we operate. Danamon on Wheels is extending our reach with five units, more than 150 client visits, and launching a new 17th anniversary mobile branch. That is all for me, and I will pass it to Theresia.
Okay. Thank you, Pak Nobu. I will continue with the next presentation on the financial highlight. Next, please. Let me start with our key financial highlights for the first half of 2026. Despite a more challenging operating environment, Danamon delivers strong and balanced growth across lending funding with double digits, as Pak Nobu mentioned earlier. Also, we have a strong profitability growth. Total lending increased by 12% year-on-year to IDR 230.1 trillion, supported by growth across all business engines.
Wholesale lending grew 16% to IDR 137.8 trillion, while retail lending increased 6% to IDR 92.3 trillion. On the funding side, total funding grew 14% to IDR 181.7 trillion, supported a 1% increase in CASA to IDR 70.5 trillion. This solid business growth translated into improved earnings. Operating income increased 7% to IDR 12.6 trillion, PPOP rose by 13% to IDR 5.9 trillion.
Net profit after tax grew 33% to IDR 2.4 trillion, lifting our ROE to 9.7%. At the same time, the asset quality continued to improve. Loan at risk improved from 10.2% to 7.8%. Cost of credit improved from 2.8% to 2.3%, and gross NPL declined from 2% to 1.7%. Overall, our results demonstrate the resilience of our diversified business model and also discipline on the risk management.
Next, please. On the loan portfolio, moving to this lending performance, total lending reached IDR 230.1 trillion, up 12% year-on-year and 5% quarter-on-quarter. Growth was broadly based across all business segments. EBFI remained the largest contributor, growing 19% to IDR 109.7 trillion. SME increased 7% to IDR 28 trillion. Consumer lending grew 5% to IDR 23.2 trillion, and loans from subsidiaries increased 6% to IDR 69.2 trillion. Our portfolio remained well diversified across both sector and also loan purposes.
Household-related financing continues to be the largest sector exposure at 32%, followed by trading at 16%, manufacturing at 16%, and other diversified sectors. By loan purpose, working capital financing accounts for around 49%, while consumer 32%, and investment loan at 19%. The balanced portfolio composition help us to capture growth opportunities while maintaining prudent risk diversification. Next, please. I will update on the subsidiary performance on Adira.
Adira Finance continue to show positive momentum. In terms of market performance, Adira outperformed the industry in both two-wheelers and also four-wheeler segments. For the five months ended by May 2026, Adira two-wheeler financing unit grew by 16.8%, compared with industry growth of 0.7%, while four-wheelers financing grew by 48.4% against industry growth of 12.8%. New financing volume reached IDR 23.1 trillion, representing 18% growth year-on-year. Two-wheeler financing contributed 41% of total new booking, four-wheeler 31%, and NPL 27%.
Outstanding loan expanded 7% year-on-year to IDR 64.9 trillion. Growth was driven by two-wheeler financing, which increased 9%, and four-wheeler financing grew by 5%. Multipurpose loans also expanded 4%. This result demonstrates Adira ability to capitalize on improving market conditions while maintaining disciplined portfolio growth. Next, please. On the funding liquidity and capital, our focus remained on strengthening granular deposit while preserving balance sheet resilience.
Granular funding increased 7% year-on-year to IDR 99.4 trillion. The composition remained healthy, with savings accounts contributing 48%, current accounts 11%, and TD 41%. Liquidity remains strong with LCR 134.8%, and NSFR at 116.6%, both above regulatory requirements. Loan to deposit ratio stood at 100.4%, reflecting efficient balance sheet utilization while maintaining ample liquidity buffers. Capitalization also remained robust. Our consolidated CAR stood at 22.3%, while bank only was 21.8%.
Importantly, almost 100% of our capital coming from high- quality Tier 1 capital, providing substantial capacity to support future growth. In overall, our funding liquidity and capital position remains strong and prudent managed. Next, please. On the operating income. Operating income grew 7% year-on-year to IDR 12.6 trillion, with net interest income contributing 84% and non-interest income accounting for 16% for operating income.
This growth was primarily driven by increase in net interest income, which increased 9% to IDR 10.6 trillion, reflecting healthy loan growth and active balance sheet management. Meanwhile, non-interest income remained resilient at around IDR 2 trillion, despite market volatility and softer treasury income. On the fee income, our non-credit related fee increased from IDR 767 billion to IDR 888 billion, which mainly supported by bank assurance wealth management. This balanced revenue profile provides a solid foundation for sustainable earning growth. Next, please.
On the asset quality, I will highlight on our asset quality performance. Asset quality continued to improve across all key indicators. Gross NPL declined to 1.7% from 2% year-on-year. NPL balance remained well managed at IDR 3.7 trillion. At the same time, loan at risk improved significantly from 10.5% to 7.8%, reflecting improving portfolio quality and collection effectiveness. NPL coverage remains very strong, which increased to 282.4%, while cost of credit also improved from 2.8% to 2.3%. It is resulting lower credit provisioning and support profitability growth. In overall, we are pleased with our first half performance. We delivered double digit lending and funding growth, strong profitability improvement, and also continued enhancement in asset quality while maintaining solid liquidity and capital position.
Although the operating environment in the second half remains challenging with ongoing uncertainty in interest rate, funding cost and macroeconomic condition, we remain focused on the disciplined growth, funding optimization, prudent risk management and execution of our strategic initiatives. This concludes my presentation. Thank you. I will hand over to Marcella. Thank you.
Thank you, Pak Nobu and Ibu Theresia for your presentation. Ladies and gentlemen now is the time for us to start the Q&A session. Please write down your name, company, and questions on the chat box menu. I will read the questions. Let us start our Q&A session with the first question come from Pak Handy, Infobank News. Thank you, Pak Handy, for your questions.
Congratulations, Bank Danamon management for the good achievement in first half 2026. There are three questions from Pak Handy. I will read the first question. The BODM members can answer the questions before I move on to the second and the third questions. How do you see the competitions on corporate and commercial loan yield, especially from the private sector? BODM members are welcome to answer the first question.
Hi, Pak Handy. Thank you for the questions. I will answer question number one. In terms of the corporate and commercial yield, so far we have adopted a gradual yield increase. We could not fully pass on the increase in the recent BI Rate hike. We take into account first, for example, the outflow relationships and the ancillary business that we get from those clients, as well as the competition landscape. Then, in each client, we adopt, depending on those three factors, what sort of increase that we apply to those clients. Thank you.
Thank you, Pak Thomas, for your answer. Now let us move on to the second question from Pak Handy. How do you see the loss on repossession trend for Adira's business?
Okay, on the loss of reposition asset to Adira Finance, so far this year is improved compared to last year. In fact, it is much lower than what happened before COVID, 2019. There is a significant improvement on loss on repossess asset from Adira Finance across two-wheeler, four-wheeler, as well as cash loan.
Thank you, Pak Made, for your answer. The third question from Pak Handy is on credit cost for the Adira and consumer business, how should we expect the outlook trend in second half of 2026?
Yeah. Mm-hmm. Thank you. Yeah, thank you, Pak Handy, for the question. I think on the credit costs for the remainder of the year, especially on the granular portfolio, we expect that with the weakening or the softening of the macroeconomic factors on the GDP, which is expected to be not as strong as the first quarter especially, and also certain other macroeconomic variables. We actually believe that there will be an increase on the credit cost for Adira.
In the case of Adira, I believe so far this year, it is running at about 5%, which is quite low, quite on the low side for Adira. We are looking at an increased level, but will still be considered quite low historically for Adira. We are looking at about 5.3%, 5.4%, the COC level for the second half, which like I said earlier, I think even for last year, if you remember, if you follow Adira, we were at 6% on Adira. On consumer, more or less the same.
There will be an increase in the current cost. Generally, we forecast an increase because of the forecast on the softening macroeconomic factors. All in all, again, in the case of mortgage, I believe so far we are at the very low trend of 0.5% credit cost on mortgage. This is expected to increase to about 0.6%, 0.7%. But generally, we are expecting a bit of a higher credit cost. However, in the overall picture, especially if we look at the historical trend, we will still be at a relatively lower level historically. Thank you.
Thank you, Pak Dadi, for your answer. We are still waiting for another question. There is another question from Ibu Vera from BNI Sekuritas. Congratulations on your results, Bank Danamon management. There are two questions from Ibu Vera. The first question is, do you have any guidance for 2026? Bapak Ibu, may answer the first question first before I move on to the second question.
Ibu Vera, for your question, thank you. I will respond on the first question. Do you have any guidance for 2026? Basically, Danamon is optimistic for the profit in 2026. We will continue to grow our sustainability compared to the previous year. Based on our projection, we will do the projection considering our company strategy. I think it will be influenced by various factors from internal and also external condition, as you may also be aware of. Thank you.
Thank you, Ibu Theresia. The second question from Ibu Vera.
I will try to address that.
Okay.
Uh-huh. Yep.
Yep. Pak Dadi.
On the LDR, it was indeed at 100% level, and the reason was because of our loan growth that has been quite successful, I believe. Our funding, of course, as what has been presented earlier, we have also increased our funding. But generally, it was not as fast as the lending growth. But for the remainder of the year, obviously, the LDR is supposed to be improving in terms of the overall liquidity position, should actually be moving below 100%. But our comfortable LDR level is actually, if you look at our historical level, it is actually at the 90-something percent level. So, we are comfortable at that level of LDR. Historically, that has been our normal level of LDR. Yep. Thank you.
Thank you, Pak Dadi, for your answer. There is a follow-up question from Pak Handy. Do you see a sign of better loan pipeline in the corporate and commercial sector? Any color on the business sector?
Loan pipeline overall for corporate and commercial remains healthy. We have a very strong pipeline, but of course, we take into account the challenge in the economy. That is also partly because of the collaboration with MUFG, that contributes to those pipelines, including the likes of Japanese company that is coming to Indonesia. In terms of business sectors, it is quite diverse. We have pipeline from several sectors, including the pharmaceutical, the real estate, et c.
Okay. Thank you, Pak Thomas, for your answer. We have another incoming question from Pak Edi Chandren from Stockbit. There is one question from Pak Edi. What factors have been growth driver for your corporate loans in the second half of 2026? Do you have the breakdown between private and government related in terms of nominal loan increase?
Okay. In terms of the sectors for the loan growth in first half you mean or second half? Okay. On the first half, so far the growth is contributed from the petrochemical, pulp and paper, food and beverage, properties and real estate, CPO industries, as well as financial companies. So far we have about 15 industries that we recorded growth. Let me see. Sorry, I am reading the second half. In terms of the breakdown, mostly it is coming from private sector. Government sectors, our exposure remain low on government-related sectors, if you mean SOE. Mostly it is coming from private sectors.
Thank you, Pak Thomas, for your answer. I would like to remind our respected investors and analysts to type your question in the chat box and I will read the question. There are another incoming questions from Ibu Yulinda Hartanto from BNI Sekuritas. Which segment does management see as the biggest growth driver over the medium term, let us say two, three years from now? Is it SME, consumer retail or multi-finance, Sharia banking or corporate or wholesale?
I will try to answer that. I believe in terms of business growth drivers over the next two to three years. Given where we are at the moment, where Bank Danamon is, our overall portfolio composition, and also given what is available, what kind of opportunities are there in the market. The level of risks in different sectors, et c. We believe that in the medium term, in the next two to three years, the biggest driver of growth may still come from the wholesale banking, and to a certain extent, of course, also from our Adira Finance, basically.
These two areas will be the biggest drivers of growth. Having said that, I would also mention that we will continue to grow in other areas also, in SME and also in consumer. That, of course, as you can probably see also, in our year-on-year growth. They will still continue to grow, but if we are looking at the biggest drivers, obviously, this will come, the wholesale banking, generally the corporate side and the Adira will be the biggest drivers. I believe this is also generally if we look at the market generally, at the banks, and NBFIs, these are generally the two areas of largest growth that most banks actually are also experiencing. Thank you.
Thank you, Pak Dadi, for your answer. We have another question coming from Ibu Posmarito Pakpahan. There are three questions, so I will read the first question first. Can management provide color on current liquidity conditions or outlook? Could you share management outlook for cost of funds, deposit mix, and NIM trajectory for the second half of 2026?
I try to answer this question. We see the competitive of the third party funds competition currently, the liquidity is quite tight. Also, dynamic of our liquidity in the market, in the banking sector, as everyone can see, is quite tight. But from Danamon side, we have a funding strategy, not only focusing on the pricing or interest rate, but also we try to emphasize strengthening our customer relationship through the provision of financial solutions.
We try to find the best solution to our customer, enhancing our service quality and also seamless services in the integrated transaction experience across our multiple channels. In terms of the NIM, in the second half of 2026, I think we expect NIM remain resilience with some pressure in the elevated funding costs and also competitive deposit pricing. We will continue to maximize our funding and also our portfolio mix to support our profitability. Thank you.
Thank you, Ibu Theresia, for your answer. I will move on to the next question from Ibu Posmarito. Given recent media speculations regarding MUFG's strategic review of BDMN, specifically addressing compliance with OJK or BEI free float rules versus a potential privatization scheme, could management clarify the current status and preferred path forward?
I will try to answer this because Danamon fully understand the current market sentiment and ongoing regulatory development. We are continuing to closely monitor the new policies issued by the relevant authorities, and we are now assessing the necessary steps to ensure full compliance. Thank you.
Thank you, Ibu Rita, for your explanation. Okay, so moving on to the last questions from Ibu Posmarito. Following the May MOU regarding the integration of MUFG Bank's Jakarta branch, what execution mechanism is being evaluated to absorb the branch asset base into BDMN?
Okay, I will answer this question. Thank you for the question. The answer would be similar to what Ibu Rita just answered. Now we are examining the appropriate structure and having the discussion with the relevant authorities, and we will comply all the law and regulation in Indonesia. That is what I can share today. Thank you very much.
Thank you, Pak Nobu, for your explanation. Before we end our Q&A session, once again, we would like to invite our respected investors and analysts, if you have another question, you may type your question in the chat box, and I will read the question. Okay, there is another incoming question from Ibu Yulinda Hartanto. In the earlier presentations, auto financing was flagged as a key focus segment. Combined with NBFI as a growth engine and the recent Home Credit and MFIN moves, does management see auto-related consumer finance as a priority area for further inorganic growth, or is that still being pursued organically?
Okay, I will answer this question. So thank you for this question, Yulinda. Basically, we will pursue our growth through our ecosystem organically. We already have a very strong base there in Indonesia. We believe combining our non-bank financial institution strengths, we can acquire more business in the coming future. But at the same time, it does not mean that we will rule out any good opportunities that are coming up to our front. If there is a good opportunity, we will examine the case, and we may do some inorganic activities. But at this moment, we do not have any concrete pipeline in our plan. That is my answer.
Okay. Thank you, Pak Nobu, for your answer. We would like to invite our respected investors and analysts, if you still have another question, you may type it in the chat box and I will read the question. There is another incoming question from Bapak Erwin Wijaya. With BI's hiking cycle and SRBI competition pushing up system-wide funding costs, what is management's strategy for defending cost of funds relative to the major banks?
Thank you, Erwin, for the question. On the competitiveness of third-party funds, which increased recently, Danamon has been able to maintain a balance between funding growth and also profitability through various of our strategies, including our product development, targeted communication, and also we have process improvement, and we aim to enhance our customer convenience, and also easing the conducting of banking transactions across multiple channels. I think it is very important. Furthermore, we also have one flagship product on the savings accounts.
We have Danamon LEBIH PRO, which offers 12 currencies in a single account in one debit card. We call it a global currency card, which we can use this card to have a seamless foreign currency transaction when we are traveling abroad. Our focus remains on customer acquisition and also deepening customer relationship by offering comprehensive products, and also we see a comprehensive financial solution for our customers so we can understand their needs and we provide them a financial solution for them. With this approach, we can maintain the deposit growth, and we can still support our profitability going forward. Thank you.
Okay, thank you, Ibu Theresia, for your answer. Maybe, Pak Dadi, you want to add something for these questions?
No, thanks, Marcella.
Okay. Thank you, Pak Dadi. Since there are no more incoming questions, then we will close the Q&A session. Ladies and gentlemen, the respected investors and analysts, once again, thank you for taking part in Bank Danamon's Investor and Analyst Briefing for financial results first half 2026. For any further interest and questions, please do not hesitate to reach us through our investor relations mailbox at investor.relations@danamon.co.id. See you at the next Danamon's corporate event. Thank you.