Slowing, Himbara's Net Profit in 2024 Will Only Grow 2.08 Percent

JAKARTA, KOMPAS – Although still recording positive growth, the profit gains of the state-owned banks association, known as Himbara, grew more slowly in 2024 compared to 2023. In 2025, Himbara's optimism in achieving better performance faces liquidity challenges.

Several state-owned banks have reported their performance in 2024. They include PT Bank Mandiri (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk or BRI, PT Bank Negara Indonesia (Persero) Tbk or BNI, and PT Bank Tabungan Negara (Persero) Tbk or BTN.

Based on the aggregation of performance reports, all Himbara assets in 2024 recorded an annual growth of 6.28 percent to Rp 6,018 trillion. Bank Mandiri was the largest contributor with assets valued at Rp 2,427 trillion, followed by BRI, BNI, and BTN.

Judging from the credit distribution, only two out of four banks in Himbara recorded credit growth above the banking industry average, which grew by 10.39 percent annually in 2024. These two banks are Bank Mandiri and Bank BNI. Each recorded annual credit growth of 19.5 percent and 11.6 percent, respectively.

The consolidated net profit of Himbara in 2024 reached IDR 142.92 trillion, growing by 2.08 percent year-on-year. This means that the net profit growth slowed down compared to the 2023 period, which grew by 22.86 percent year-on-year.

Banking observer, Paul Sutaryono, said that the slowing rate of Himbara's profit growth was due to less than optimal credit interest income (interest income). This can be seen from the increase in the number of loans that have been approved but not yet withdrawn (undisbursed loans). Its value increased by 6.6 percent annually in November 2024.

"The increase in undisbursed loans is one indicator that income from credit interest is less than optimal. As a result, net profit did not experience a significant increase. This could also drive net income (net interest margin/NIM) to thin at a lower level," he said when contacted from Jakarta, Wednesday (12/2/2025).

There is tight competition in collecting public funds, between banks and government bonds and debt securities.

On the contrary, Paul continued, the level of efficiency seen in the ratio of operational expenses to operational income (BOPO) has actually increased. A higher expense ratio reflects inefficient performance, which in turn contributes to the thinning growth of Himbara's net profit.

On the other hand, there is intense competition in the collection of public funds between banking products and government-issued bonds. For instance, Retail Government Bonds (ORI) offer a more attractive coupon of around 6 percent. Meanwhile, bank deposit interest rates are only 4.25 percent.

"It means that banks can lose competitiveness. However, it is almost impossible for commercial banks to dare to raise deposit interest rates close to bond coupons, because the deposit insurance interest rate by LPS (Deposit Insurance Corporation) is only 4.25 percent for commercial banks and 6.75 percent for rural banks. This is what has created a high burden for banks all this time," said Paul.

However, Himbara has the opportunity to improve its performance in 2025 with a number of government priority programs. For example, the national strategic program (PSN) and the construction of 3 million houses. Instead of pursuing targets alone, banks should continue to improve risk management.

Himbara, according to Paul, can also boost non-operational income (fee-based income), to offset the declining credit interest income. Thus, credit distribution and the company's performance can continue to grow in 2025.

Contacted separately, banking observer and Binus University lecturer, Doddy Ariefianto, said that the slowing growth of Himbara's profits was outside the normal business cycle in general. The cause is likely the activity of writing off bad debts (write off).

Referring to the Indonesian Banking Statistics data released by the Financial Services Authority (OJK), write-offs on credit provided by Himbara as of November 2024 reached IDR 385.45 trillion. This amount increased by 17.95 percent annually.

"If the business cycle, it usually doesn't slow down that much. In terms of credit distribution, for example, it doesn't drop from 20 percent to 2 percent. This means that the profit in 2023 will be almost the same as in 2024 or will barely grow," said Doddy.

Thus, Himbara focuses more on efforts to improve credit quality by reducing the non-performing loan (NPL) ratio. In line with that, the company also thickens its reserves, so that profits do not grow significantly.

BRI President Director, Sunarso, stated that BRI's credit distribution grew by 6.9 percent annually during 2024, followed by improvements in credit quality. This is reflected in the improvement in the NPL ratio, from last year's 2.95 percent to 2.78 percent.

"BRI also prepares more than sufficient reserves, as seen from the NPL coverage ratio of 215 percent. This means that more than twice the NPL has been reserved in case the credit cannot be collected. This is done so that we can still pay deposits, savings, and current accounts of savings customers," he said in the 2024 Performance Presentation, online.

Along with the issue of credit quality in the micro, small, and medium enterprises (MSMEs) sector, Sunarso continued, BRI will maintain the cost of credit or cost of creditaround 3-3.2 percent or lower. Furthermore, NPL for the MSME sector is targeted to be below 3 percent.

To grow, banks still have to face liquidity challenges, because globally, we cannot expect much from a US interest rate cut.

Overall, BRI targets credit distribution in the range of 7-9 percent or within the lower threshold of the target set by OJK of 9-11 percent. Furthermore, NIM will be maintained in the range of 7.3-7.7 percent.

However, Sunarso remains wary of challenges stemming from economic pressures from the global side, such as the uncertainty of economic recovery, the United States (US) tariff policy, and the direction of the US central bank's slowing interest rate cuts. All three have an impact on the domestic economy.

From the domestic side, falling inflation and pressure on people's purchasing power have the potential to have a negative impact on MSMEs. This condition can cause demand for credit in the MSME sector, as BRI's largest market share, to potentially decrease.

"To grow, banking still has to face liquidity challenges, because globally, we cannot expect much from the US interest rate cuts. Then, the trade war will also have an impact on foreign exchange issues, which can increase the benchmark interest rate. This means there will be liquidity challenges," said Sunarso.

BTN President Director Nixon LP Napitupulu is optimistic that by the end of 2025 the company's assets will reach Rp500 trillion. As of 2024, BTN's assets were recorded at Rp469.61 trillion or up 7 percent compared to 2023 which was Rp438.75 trillion.

The increase in asset value is supported by BTN's support for the government's priority program related to the construction of 3 million houses. In addition, BTN is also aware of macroeconomic dynamics by trying to create sustainable business growth.

Our optimism is driven by the government's commitment to provide decent and affordable housing to all Indonesian people through the Three Million Homes Program.

"Our optimism is driven by the government's commitment to provide decent and affordable housing to all Indonesian people through the Three Million Homes Program," Nixon said in a written statement, Tuesday (11/2/2025).

Nixon added that BTN's asset growth of up to IDR 500 trillion will also be supported by solid credit and third party funds (DPK) growth. Throughout 2024, BTN recorded credit distribution of IDR 357.97 trillion or grew by 7.3 percent annually and DPK collection of IDR 381.67 trillion or grew by 9.1 percent annually.