Good evening, ladies and gentlemen, and welcome to PT Bank Mandiri's third quarter 2023 results briefing. Thank you all for joining us today. My name is Laurensius, head of investor relations. Together with us today as speakers, we have Darmawan Junaidi, our CEO, Ibu Alexandra, our Vice CEO, Siddik, our Chief Risk Officer, Sigit, our CFO, and Pak im, our IT Director. Before we start, I strongly encourage you to download both our presentation material and financial statement currently available in the investor relations webpage of Bank Mandiri. Please note that a Q&A session will be opened after the presentation, and participants who wish to ask can use the Raise Hand button in the Zoom app to wait for your name to be called and your mic unmute.
Questions typed in the Zoom chat box are not prioritized in this meeting and will likely be addressed after the call by the Investor Relations team. We're also happy to take questions through emails afterward, and we'll try our best to reply to your questions as soon as we can. Now to start, I would like to hand the presentation to Darmawan, our CEO. Please start. Thank you.
Thank you very much, Lau. Allow me to start the discussion by providing a short commentary from the macro point of view. The left chart shows Mandiri Spending Index, which we developed using our own internal customers' transaction data through credit cards, debit cards, et cetera. As you can see, in third quarter 2022, the Mandiri Spending Index showed a more stable and better trend in customer spending relative to activities during the first half 2020, 2022, which was more volatile due to the Omicron activity restrictions. The economic reopening helped businesses and should translate to better GDP growth, which we expect to be more than 6% in third quarter 2022. Partly thanks to the low base of last year's third quarter 2021 on the back of the Delta variant.
On inflation, the recent fuel price hike had led us to increase our internal inflation estimate to 6.2%-27% in December 2022 from 5.95% in September 2022, and less than 2% last year. This inflationary environment has led to higher BI rate, which we expect to increase further from current level. As regards to Bank Mandiri's financial performance, in summary, the positive trend since the beginning of the year continued in third quarter 2022. Consolidated profit grew by 55% year-on-year. Pre-provision operating profit up by 26%. Loans and CASA grew by 14.3% and 12% respectively. The aforementioned achievements were supported by well-managed ratios such as NIM improvement, low cost to asset, and well-managed cost of credit. As a result, ROE continued to be healthy. Asset growth continued in third quarter 2022.
Loan growth accelerated nicely across most segments, bringing total consolidated growth to 14.3% year-on-year. Our core segment booked 12.2% year-on-year, while high yield segment such as SME, micro, and subsidiaries book higher growth on year-on-year term. Retail loan segment growth performed well with aggregate new booking higher than the pre-COVID level at IDR 131 trillion in 9 month 2022, as you can see in the bottom left chart. Additionally, loan growth also accelerated across all type of use, which are working capital loans, investment loans, and consumer loans. On a quarterly basis, we saw a nice improvement in net interest margins trend. As you can see on the right-hand chart, both bank-only and consolidated NIM improved in third quarter 2022 from previous quarters, driven by higher yields and flat funding costs.
The increase in loan yield, shown on the left-hand chart, was largely due to the repricing of U.S. dollar loans, which as of September 2022 accounted for about 24% of bank-only loans. Slight change on loan mix between wholesale and retail also helped with the yield improvement. Meanwhile, rupiah loans yield remained flat. On the other hand, our cost of funds was well managed, up slightly compared to previous quarter, largely due to the higher time deposit pricing, while CASA pricing trends still decline. Bank-only CASA ratio remained high at 73%, but lower compared to previous quarter at 75%. This is due to the higher time deposit that we raised to anticipate for tighter liquidity.
As of September 2022, our bank-only LDR stood at 83% and consolidated LDR at 85%, which is a good positioning. The right hand chart shows cost of deposits by type. As mentioned earlier, our deposit cost increased compared to the previous quarter. However, both cost of demand deposit and savings deposit continued to decline during third quarter 2022, despite higher benchmark rate. Let us now shift gear to operational cost side of the equation. Much has been done, and the result so far is encouraging. Bank Mandiri was able to maintain lower cost-to-income ratio in September 2022 at 36%. Moreover, cost to asset ratio was flat at 2.3% in September 2022. The bank level of efficiency has improved meaningfully over the past years.
On average, asset managed per branch and people per employee has improved, as shown in the upper right chart. Lower cost to income ratio is achieved as a result of better productivity. At the same time, jaws ratio reached more than 13% in 9 months 2022, one of the highest in the past 10 years. Additionally, digital innovation resulted in better productivity and lower customer acquisition costs. We acquired our customers directly through Livin' app 100% online, which has reached 55% of month-to-date total new customers, almost double since the beginning of the year. We expect this trend to continue in the future. As we approaching the end of COVID restructuring moratorium in 2023, I would like to highlight our COVID restructuring loan portfolio update.
Bank-only COVID-19 restructure portfolio stood at IDR 45.6 trillion, or 5% of total Bank-only loans in September 2022. It has declined significantly from the peak in June 2021 at IDR 96.5 billion. Moreover, we have set aside more than 4x loan loss provisions, which is more than enough in our view. We will continue to watch these accounts very closely and monitor existing COVID-19 restructure book to adjust our provisioning level if necessary. More detail on COVID restructure portfolio will be discussed by Pak Siddik later on. I will now pass on the presentation to our Vice President Director, please, Ibu Sandra.
Thank you, Pak Darmawan. A year has passed since we launched Livin and Kopra back in October 2021. Within a year, Livin and Kopra have led an outstanding achievement in both users and transactions growth. Livin has been downloaded by more than 18 million times with 14 million registered users. Kopra has also gained 68,000 registered users with IDR 13,420 billion transaction value year to date, September 2022. More features and updates for both Livin and Kopra already in the pipeline to be launched in the future. As a result of the above, Bank's profitability continued to be maintained with consolidated ROE standing at 18.3%. Overall, we are happy with the achievement so far, but remain heavily focused on our long-term goal, that is sustainable performance and high profitability.
Next, I would like to touch on the guidance. All of the guidance remain unchanged with loan, NIM and cost of credit guidance respectively at 11%, 5.1%-5.5%, and 1.4%-1.7% for this year. Now, I would like to pass on the presentation to Pak Sigit, our CFO.
Thank you, Ibu Sandra. Ladies and gentlemen, now allow me to run through our financial highlights. In 2Q 2022, our total debt increased by 12.3% year-on-year, driven by 14.3% growth in loans. On liability side, demand deposits grew by 8.5% year-on-year, and savings grew by 15% year-on-year, growth combined drove CASA growth of 12.1% year-on-year. Deposit growth slightly higher than CASA at 12.13% year-on-year. Overall, consolidated ratio stand at 70% as of September 2022. On the income side, net interest income was up 20% year-on-year to IDR 54 trillion in nine months 2022, driven by both interest income and interest expense improvement.
Non-interest income was up by 3.7% in 9 month 2022, driven by recurring fee-based income. Total revenue grew 16% year-on-year to IDR 91 trillion, higher compared to the growth in operational costs of 6% year-on-year, leading to positive jaws and maintain cost-income ratio.
BDOPE was 23% higher in 9 month 2022 year-on-year, while provisioning was down meaningfully during 9 month 2022, which helped net profit to grow by 59% year-on-year to IDR 30.7 trillion. Most of the key consolidated ratios are showing positive results in 9 month 2022, starting with net interest margin, which was 5.42% or 39 basis points higher year-on-year. Our consolidated cost income ratio came down to about 41% from level above 44% in September of last year. Equally, cost to asset ratio had also came down to 2.66%. Asset quality ratios are showing encouraging trend in general, and credit cost was kept at a very healthy level of 1.46% during the quarter.
All the above led to increase of the consolidated return on asset to 2.3% in 9 months 2022, additional equity to 15.3%. The next slide shows the group's loan and deposit breakdown. Growth of loans until September 2022 was led by corporate at 12% year-on-year, SME and micro at 14% year-on-year, and consumer at 10.3%. Our subsidiaries also contributed meaningfully to growth with 22% year-on-year. In deposit, focused growth was demand deposit and saving deposit, as you can see on the right-hand side. Loan yield improved in third Q 2022, as you can see on the top left chart, especially from the wholesale repricing. This is primarily driven by the higher JIBOR and US dollar reference market we are seeing in the market.
At the same time, our initiative on CASA had led to maintain our funding cost. Both combined supported the uptrend in net interest margin. The bottom right show the NIM of Bank Only as well as the subsidiaries, Bank Syariah Indonesia and Bank Mantap. With a relative stable NIM trend in both subsidiaries, we were able to improve our consolidated NIM as well in 9 months 2022 to 5.4%. Our consolidated non-interest income saw a growth of 3.7% year-on-year in nine months 2022 to IDR 24.6 trillion. This was primarily driven by recurring fees such as loan-related fees, card, Kopra, and e-channel, including fees from the Livin' app, which was up 29% year-on-year in 9 months 2022.
The non-recurring fees, cash recovery helped growth while treasury income remained challenging. Overall, our consolidated non-interest income to total revenue remained at healthy level of 27.2% during 9 months 2022. Trend in operational costs during third Q 2022 was good, with both cost income ratio and cost to asset ratio heading down. In third Q 2022, our consolidated cost to asset ratio was 2.7% and cost income ratio 40.7%, lower relative to historical, our historical level. I would like to now pass the presentation to Ahmad Siddik Badruddin, our Director of Risk Management. Ahmad Siddik Badruddin.
Thank you, Pak Sigit. Ladies and gentlemen, please allow me to run through some updates on the asset quality trend up to the third quarter 2022. Overall, the indicators that you can see on the slide are showing positive progress for the group. COVID-19 restructured book portfolio continued to decline, as shown in the top left chart, to 5.3% of our total consolidated loans. Both subsidiaries and Bank Only saw improvement. Further, the improvement we had for NPL ratio and LAR ratio in third quarter had led to lower loans at risk ratio of 13.4% consolidated, lower quarter-on-quarter and year-on-year. The NPL ratio, which stood at 2.24% consolidated, is well covered with 268% NPL coverage on a consolidated basis.
As a result of the above, we were able to maintain our credit cost at 1.6% consolidated in the first 9 months of 2022, lower than the previous years. Our guidance on the consolidated gross cost of credit is unchanged, and we intend to keep our credit cost level between 1.4% to 1.7% for the full year 2022. Next, I would like to update you guys about our COVID-19 restructured book positioning and its risk profile in more detail. The numbers shown in this table are in Bank Only term. In September 2022, the outstanding COVID restructured loans dropped to IDR 466 trillion, lower compared to IDR 58 trillion in the second quarter. More importantly, the improvement happened across all segments in both wholesale and retail banking.
The medium risk and high risk COVID restructure loan remain manageable at around 39% and 21% respectively, as you can see on the table. Please note that the provision set aside for particularly high risk group is 60% as of September 2022, and the provision set aside for the total book is 31.8% higher as compared to 19.5% in the second quarter. We've set aside 4.3x COVID restructure coverage to NPL. The coverage is more than enough in our view. We will continue to watch this account very closely and monitor existing COVID-19 restructure book to adjust our provisioning level if necessary. Finally, I'd like to update regarding our capital positioning. In general, the CAR level has improved to 19.3% in September 2022, and well kept within an optimal level.
In a yearly context, we intend to maintain CAR and Tier I ratio at around 18%-20% range in the near- to medium-term. I'd like now to pass on the presentation to Pak Tim Utama, our Chief Technology Officer, to discuss more on super app Livin' and super platform Kopra. Please, Pak Tim.
Thank you, Pak Siddik. Allow me to break it down into two parts. I'll talk first on the Livin' side, and then I'll move on to Kopra. I would like to again take you, because this is absolutely the foundation of how we built our super app, and this is, has been designed as a journey, and that journey is not just about building mobile banking app. It is about going beyond banking, where we look at all the different stages. Stage one, as I've actually explained before, it is about having the right crowds, having this super app used in a significant way. That is moving from the physical distribution to a new digital. The focus for that is very simple. That is about UI and UX, providing the right experience, giving the right use cases.
That's how we're gonna build cloud. Once we have that done, we move to the second stage, where we start monetizing the cloud and unlocking values. We are now in phase three, where a lot of development has happened. Moving on from there is gonna be endless opportunities. Let me now cover a bit more what we have seen on the next page, please. Where, as you can see, I think I'm very optimistic to provide an update today where the performance has been outstanding. With this consistency that we have seen since the very first of it, since the first inception. In just 12 months, as Ibu Sandra has actually alluded before, the app has been downloaded more than 80 million times.
What is more encouraging is, after the download, we see reasonably high percentage of registered users. Again, the more critical thing to look out for is the active clients that are there of the registered users. As Darmawan said earlier, of all the new customers onboarded, up to now since the launch of Livin, 55% has actually come through our app. The transaction has grown significantly, as you can see on the volume side. It has grown more than 160% year-on-year. On gross transaction value, it has grown by 50% year-on-year. Annualized, it's a significant GTV that you can see by just looking at the last quarter, IDR 630 trillion times four.
That's where we are seeing in terms of annualized transaction. Now, I'm just gonna focus a bit more, next page, please, on the newest features that we have introduced in Livin, but beyond banking. We have Sukha and Investment. This is all about look to answer and satisfy the client's needs beyond ordinary banking. This has given us a new opportunity for value creation. Let me just briefly touch on Sukha. Sukha is really about venturing beyond banking, and we continue to do innovation to bring a lifestyle use cases to our clients. If we have Sukha, you can see there, and those that have used us can see underneath Sukha, and this is still an ongoing development, where the user growth base has doubled.
The growth of transaction volume has grown four times more. The growth of value has grown four times more, and the volume has actually grown six times more. Sukha will enable people to stay within the Livin' app, address the lifestyle of needs from them without moving or leaving the app. We've integrated, and today we have ability to buy plane tickets, train tickets, golf courses, concert, games, and so on and so forth. The other piece that is quite exciting that I see very encouraging and has been responded extremely well is on the investment side. We have democratized investment, and this therefore unlock the door to wealth creation for the masses, because with IDR 100,000 you can buy mutual fund.
What you've seen in terms of growth is the user base has grown 20%. The AUM has grown 45%. We have now about IDR one-half trillion value of transactions since launch. On the average, when we first started and until now, it was launched in May, we are now touching IDR one-half to IDR 2 million. At peak days, we can touch $3 million in one day. We will continue to develop on this investment front, where very soon we're gonna be launching the bond products, primary bonds, and there will be more beyond that. Let me move on very fast now. I think the key to the success of Livin', next page, please, where it is about endless innovation.
We've got to keep innovating to stay focused and stay relevant, where we are gonna be creating new revenue streams. The use cases that we think will be useful for our clients, but at the same time we'll be bringing new revenue streams to the bank. As you've seen, followed us, you know, since October launch in 2021 till now, on a monthly basis, we're providing new features. What's coming up soon is gonna be registration for overseas customers. As long as they are Indonesians, they are living overseas, don't have to have Indonesian mobile, they can open an account through Livin'. We're gonna do cross-border remittances at the cost of less than $1 with very attractive exchange rates, where you can do cross-borders with full amount.
Obviously, I've mentioned about the primary bond. Let me now switch gear to move into the next page, which is the Kopra, which is our super platform. What we have, actually we are very proud to say that we will continue to look for features, and we are offering now superior mobile features for extra convenience for every business transaction. Kopra has been designed as super platform, but now we've introduced mobile app, where people on the go, especially people that are authorizing transactions, can do so. Also at the same time, we are allowing now to open giro online without the need to actually visit a branch. Additional giro accounts can be opened through the app.
Obviously, the other thing that we have added is virtual assistant that are able to help answer clients without the need to, again, engaging our branches. As you're following that, we continue to see that eFX onboarding suppliers and onboarding transactions via channel has been responded extremely well. On the next page, you can see that with Kopra we are able to continue to secure our position as the lead operating bank account, operating account bank for our business clients. I mean, this is the underlying principle where Sigit earlier mentioned about the CASA ratio. Through this, our position has been very dominant in the market as a wholesale player.
You can see that, wholesale transaction value now through Kopra has grown extremely encouraging by 20% up. It has touched on the nine months at IDR 13,420 trillion. On the cash side, significantly, it's grown by 25% to the number that we've seen on the page. eFX, I think it's doubled to IDR 149 trillion. Value chain, it's picking up. This is absolutely gonna be the next phase that we gotta keep pushing, and this is where we're really gonna push down to the lower levels. The wholesale transaction volumes and trade bank and Kopra, you can see on the chart, is showing meaningful increases.
I would like to actually draw to your attention, if I combine Kopra and Livin', if I were to follow BI's digital economy transactions, that has been somewhere reported at around IDR 51,000 trillion. Bank Mandiri alone through our digital platform now has captured 40% of Indonesia's digital transactions. If you annualize Kopra of the IDR 13,420, becomes about IDR 18,000+, and then Livin' alone is already IDR 2,500+. We are actually getting the 40% of that share in Indonesia. With that, I think, you know, we can show a report to say that our digital transformation has been responded very well by the market.
Now let me pass you to Ibu Sandra, who's gonna take us through the presentation on ESG. Ibu Sandra, please.
Thank you, Tim. Ladies and gentlemen, let me now touch a little bit on some of the bank's ESG initiatives. In general, we are on track and very much aligned with the banking regulation on sustainable practice under POJK 61, which covers sustainable financial products and services, human resources, and corporate governance. Some of our sustainable financial products and services are the sustainable bond, which we issued last year with 54% allocated to finance social projects, electric vehicle financing for retail customers, and sustainable loans. We also continuously educate our clients through workshops and group discussion forums. On the social aspect, we participated in several corporate social responsibility programs, along with loan disbursement through our financial inclusion channel, such as agent banking and P2P lender. Our sustainable portfolio has gradually increased throughout the years.
As of third quarter 2022, about 24% of the total loan is categorized as sustainable portfolio, which consists of 52% micro, small, medium enterprises, 42% sustainable palm oil, and the remaining being financing towards renewable energy, clean transportation, and more. Moreover, Bank Mandiri is committed to support sustainable banking by prohibiting financing projects that endangers the environment and social. Some of the credit policy can be seen in the right-hand side of the slide. This slide provides a specific update on our palm oil exposure. Out of the total outstanding of IDR 88 trillion in third quarter 2022, about 80% is wholesale, corporate, and commercial, while 20% are SME and micro, which are largely the plasma farmers. Mandiri is actively financing more than 76,000 PKO farmers. Moreover, we also have a strong policy in growing palm oil sector.
Some of the criteria we ask in our debtors are ISPO certification requirement, no child labor, grow palm tree in sustainable land, no peatland policy, and NDPE policy, which is no deforestation, no peatland, no exploitation. More of the policies can be seen in the upper right part of the slide. The bottom right chart provides an update of the mix between ISPO certified and uncertified loans. Here, we believe we are making a good progress of currently having around 90% of our exposure in certified one. We also take part in supporting renewable energy ecosystem. As of third quarter 2022, our exposure is about IDR 44.8 trillion in renewable energy, which increased by 13% since 2021.
We signed an MoU on green financing and expand utilization of the solar rooftop system and an MoU for electric vehicle charging station as our commitment to support renewable energy. Lastly, through various channels, Bank Mandiri has carried out several CSR and financial inclusion initiatives that have had a positive impact on approximately 2.8 million Indonesian people through Mandiri Sahabat Program, which provides entrepreneurship and financial management training program to more than 15,000 Indonesian migrant workers. Collaboration with fintech companies such as Amartha, Kredit Pintar, Akseleran, and Investree, with credits that have been disbursed amounting to IDR 1.8 trillion to more than 128,000 borrowers. Lastly, program for distributing banking products to all corners of Indonesia and providing job opportunities through more than 158,000 banking agents.
That is all from me, and I will hand back the presentation to Lau for Q&A session. Thank you.
Thank you very much, Ibu Sandra, and thank you very much to all speakers. Ladies and gentlemen, if you have any questions, you can raise the Raise Hand button. Press the Raise Hand button. We'll first take some of the questions, and you know, from the Raise Hand, and then we can go to the chat box ones. I'll start with Ferry Wong from Citi.
Yeah. Yeah. Thanks. Yeah. Hi, can you hear me?
Yes, we can.
Thank you for the opportunities. Congratulations on your good result. Two questions from me to the management of Mandiri. The first one is, can you elaborate more on your U.S. dollar loan-to-deposit ratio? Because as of the second quarter, I think your LDR for the U.S. dollar was around 107%. Could you please update on the third quarter number? As Pak Darmawan mentioned that the U.S. dollar loan composition at the bank only reached around 24%. What do you think about the demand going forward?
Are you expecting that the deposit funding in U.S. dollars will be increasing in the fourth quarter and also in the first half of 2023? How is your growth in terms of the deposit funding in U.S. dollars? The second question is on your credit costs in the third quarter of 2022. There is a pick-up in terms of quarter-on-quarter from the second quarter of 2022. Could you please elaborate on that? Because if I see the quarter-on-quarter for the other two banks, BNI and BCA, they are experiencing a decline in terms of credit costs in the third quarter.
Is it because you are, you know, more conservative and then you wanted to allocate a bit more in the third quarter? Thank you.
Thank you, Ferry. I think Pak Sigit will take your first two questions on the LDR involved in liquidity situations on dollar and rupiah. Perhaps Siddik will later on touch on the cost of credit trend, and Pak Sigit. Thank you.
Thank you, Law. Thank you, Ferry. In third quarter, our loan-to-deposit ratio improved compared with the second quarter. As you know that, our bank-only loan-to-deposit ratio, 83% in total. For the U.S. dollar, our loan-to-deposit ratio is 105%, as shown compared with the second quarter, 115. For the IDR loan-to-deposit ratio, still maintained at around 78% in third Q 2022.
Thank you, Pak Sigit. I think just to give a perspective, the growth that we're seeing so far has been driven by the rupiah. I think there is more likelihood of, you know, growth going forward that is going to be driven by the rupiah as opposed to the dollar, which is part of the bank's initiative in order to basically control the liquidity situation on the dollar. Maybe to the next question about asset quality and credit costs, Siddik on. You'll see. Thank you.
Actually, the cost of credit this is in June 2022 is around, you know, 1.27%, and in September it's 1.30%. It's really insignificant increase, and there's no particular uptick in any particular segment. We're just adding a little bit more reserve here and there. And then you can see that as well in the higher coverage. Bank-only now we are at 192%. That's why we'll continue to maintain that as long as there's nothing, anything significant in any part of our portfolio. The 1.27%-1.30%, in our opinion, is no signs of worrying.
We don't know what the others did, but I think we have different business portfolio across BNI, BCA, and Mandiri. We have our own strategy for credit provisioning. Thank you.
Okay. Thank you, Pak.
Thank you, Pak Siddik. Just to give a reminder, Ferry, I think, you know, relative to our guidance, which is 1.4%-1.7% consolidated, the 1.46% that we have in the nine months of 2022 is very much within the guidance that we're basically aiming at. Next question coming from the line of Harsh Modi, JP Morgan.
Yeah, hi. Thanks for the call. Two questions. First is loan growth. Pretty good numbers, 15% year-on-year, or slightly above that. How do we think of not only full year 2022 but your initial discussions on budget for 2023? Do we expect 15% on loan growth to sustain next year? That's the first one. Second, back to liquidity. Right now it seems to be all right, but as you look at your growth requirements over the next three, six months, and given that from September we have very high reserve requirement, how do you think your cost of funds will shift, especially competition for both special savings and time deposit? How should we think about cost of funds and your ability to pass the cost of fund in the next six months? Thank you.
Thank you very much. Maybe, Siddik, is it possible for you to just provide some, you know, insights on the growth and then maybe Siddik touch on the cost of fund side. Thank you.
Sure. Yeah. I think, you know, we have been fortunate to have.
Quite a high degree of loan growth, including the subsidiaries at around 14%. I think next year, in our opinion, we will be very cautious in terms of decisioning how much loan growth we want to be, because I guess we have to take into account the potential impact of the various macroeconomic environment, global, that may impact our growth of economy in Indonesia. We also need to think through about any potential impact of the change in OJK policy on credit relaxation for COVID portfolio, as well as any other geopolitical risks that we have to take into account. In our opinion, probably the loan growth may be slightly lower than this year's, but we'll probably update you more in the next analyst meeting.
Thank you. Let's see. Let's go Sigit .
Yeah. If we see our cost of fund in third Q compared with the second Q on the demand deposit, we see the cost of fund in third Q are lower compared with the second Q and also in savings account. In the time deposit, of course, following the interest rate of savings deposit hike in August and September, we slightly increase. We believe that we can manage such level, and we are very selective to give above-BI-rate to our valuable customer deposit. We also believe that we can still maintain and achieve higher net interest margin because we maintain our CASA at high level and selective to a time deposit.
Of course, we believe that our cost of fund in the first quarter 2022 slightly go up, but still we expect to stay below 1.3% in the end of 2022. On the other hand, repricing in loan will happen since BI rate increase following the repricing in U.S. dollar, and it benefit for our yield of loan and also positive to our net interest margin end of 2022.
Great. Thanks. If I could just ask one more on dollar liquidity. It seems right now liquidity is ample, but how are you looking at potential for tightening dollar liquidity, if at all, in three-six months? Thank you so much.
Yeah. Hi, so I think, you know, when it comes to the liquidity, it is correct that, you know, when it comes to the dollar, it is definitely tighter than rupiah. There may be some adjustments, in terms of the cost of funds in dollar that we might need to in the next couple of months, quarters. I think we're anecdotally already seeing that kind of trend going on in the market as well. I think thankfully for us, you know, the yields that we are seeing in dollar as well. We're showing a very good trend of an almost immediate, you know, repricing sort of effect from the increase of LIBOR and SOFR.
Ultimately, it's a function of balancing out the yields that we're having in the bank loans, that is, home currency, U.S. dollar versus the liquidity on the U.S. dollar side.
Thank you.
Thank you very much. I think just before moving to Jayden, I'll just reply to some of the recent questions from Yun-Chuan and Mohit. The question is, why was the IDR asset yield flat year-on-year, even though policy rates have been increased? I think the big answer on this one is the fact that the increase that we had on the BI rate, you know, happened mostly towards the end of the quarter. 25 basis points at the end of August, and 50 basis points at the end of September. I think there should be some lag, as in, you know, in the term of the repricing in the rupiah context. Moving on to Jayden from Macquarie. Jayden?
Hi. Can you hear me now?
Yes.
Okay. Thank you. Thanks very much for the opportunity and, well done on a really solid result. Just a couple of follow-up questions. Just on the loan yield, have you seen much benefit as the restructured focus continue to improve? I think there's further sequential pick up in loan yields coming from that factor, or is it just base rates? That was the first question. Secondly, as we are seeing rates going up, how do we sort of balance with any corporates that would sort of like to lock in, you know, those lower restructured rates even longer? You know, how much discipline are you applying to pricing? Those are my questions. Thanks.
Sorry, Jayden, can you repeat the second question, please?
Yeah. As rates are going up and, you know, big corporates can see it, if they're enjoying lower restructured yields, is there any risk that they try to lock those in for longer? How do you sort of guard against that? Thank you. Maybe specific on the, you know,
I think definitely the loan yield has seen a slight improvement due to the fact that we've actually unflagged a big portion of the restructured book due to COVID. About 86% of the restructured book originally has now been paying. That has been reflected in the improvement in the loan yield, but mostly in IDR. In terms of the next question on the rate hike, you know, whether how effective we are in repricing, you know, our corporate loan book, you know. I think we have already repriced 28% of our loan in wholesale segment, which those are with reference rate. We are actually scheduling and planning to actually increase that portion of, you know, repricing to around 50%.
We are assessing each individual account very closely because we want to make sure that the repricing will not impact into the asset quality. We would prioritize the asset quality over loan yield. We are continuing to actually negotiate and talk with our big corporates and identify, you know, areas for or accounts that for us to reprice in the next one-three months. Again, you know, we have to look at the situation, the impact of the softening of the economy to the cash flow of the corporation. You know, from 23%, we'll probably move to around 50% in the next three months.
In terms of, you know, big corporate restructuring in the longer term, we have not seen any signs that this softening of the global economy will result in major restructuring in the corporate accounts as of today.
Thank you, Pak. If I may just ask one more, just on the other end of the portfolio, the consumer and retail side. I mean, the overall credit charge at 1.3% is very, very solid, right? Are you seeing any potential signs of weakness from the fuel price hike or the broader macro? Just even the bank's exposure to Taspen, I think that's also a relevant part of the book as well.
Yeah. I think one thing about our consumer banking strategy on the loan book is that probably we are slightly different than other banks' consumer banking strategy, due to the fact that we have 5 million payroll accounts with us, and we're actually selling mortgages, credit card, personal loans into this payroll account. Most of the payroll accounts come from civil servants, military officer or employees of our corp, top corporate banking clients, you know. These are quite solid and quite robust in terms of going through the crisis. Only a small portion of our corp consumer banking book are from the weaker self-employed segment, you know.
We'll continue to adjust, you know, the interest rate in mortgages, personal loans and auto loans, along with the benchmark hike, as well as the move from the competition, you know. But again, due to our low cost of funds, we can afford, you know, the possibility of adjusting our interest rates so that we continue to actually maintain or increase market share in retail banking.
That's great. Thank you very much, Pak Siddik. Thank you a lot.
Thank you, Jayden Vantarakis. I think, due to time, we'll take one last question. I know that there is Selvi and Mohit happy to take a call after the analyst meeting. One last question from Lenny, Eboleni.
Hey, thank you very much, and a great presentation. Yes, my question is with regards to NIM. Can you give guidance for NIM in 2022? Do you see a higher NIM in 2022 versus trend last year? Second is on the cost-to-income ratio. Do you expect cost-to-income ratio to go down next year? Certainly on the credit cost, do you expect lower credit cost as well going into 2023? Thank you.
Right. Thank you, Eboleni. Maybe we can give you some guidance or directions, you know, on these basically earnings drivers. Pak Sigit on NIM and cost-to-income ratio, and maybe Pak Siddik on the cost of credit.
Yeah, thank you, Eboleni. We expect that in 2023, our NIM slightly increase. In our stress scenario, we expect that we strongly believe that NIM should be improved in 2023. Cost-to-income ratio for the bank only today around 35.7% and also consolidated level around 41%. We also believe that we can maintain at that level. For the bank only, we expect our cost-income ratio around 37%. For the consolidated level, we expect we can cap around 40% on our cost-income ratio.
Okay, in terms of cost of credit, you know, we mentioned to you in a previous analyst meeting that our objective for having a steady state cost of credit in the medium to long term would be around 1.1%-1.3%. We are on our way to get there. Probably in 2023, we'll have cost of credit in the range of 1.2%-1.4%, and definitely would be around 1.5%. There is some upside, a potential upside in terms of reversal of some of the coverage to NPL, especially after we understand better beyond March 2023 on what the OJK policy would be.
If the economy continues to stay quite strong at 5% GDP, there may be opportunity for us to release some of the you know loan loss provisions or coverage. That risk will probably be you know below 260 or 250% in 2023.
Thank you, Ahmad Siddik Badruddin. Maybe just to add into the NIM sort of direction. It's worth mentioning that you know out of the 83% bank-only LDR, we have 78-79% of LDR in the rupiah. There is also an appetite to probably increase the loans deposit ratio you know next year. It's gonna be capped below 90%.
Definitely we'll see, you know, some incremental increase in the LDR that fully consist of the net interest margin as well.
Thank you. I'm sorry, just one last follow-up. Does Mandiri see this, you know, automatic repricing in terms of both the loan as well as the commercial loan? Both the corporate as well as the commercial loans.
Basically, for the dollar, definitely we are seeing that automatic and almost immediate repricing as soon as June, July, and we continue to see that uptrend in the third quarter, which, you know, partly drove the increase of yield. In the rupiah, we have about 11% of total loans that is benchmarked. Basically should be, you know, automatically repriced as well. But of course, there may be some lag. We had the 75 basis points of rate hike in the BI benchmark, you know, happening toward the end of third quarter. If we were to look at, you know, some of these impacts, you know, fourth quarter would be the quarter where, you know, we should be expecting those immediate sort of repricing.
Okay. Thank you very much.
Thank you. Thank you very much to all investors and thank you to all speakers. I now would end the presentation on the third quarter earnings. Thank you. Thank you very much.