The first major commercial Indonesian bank that published its full-year 2012 results is Bank Rakyat Indonesia (BRI), Indonesia's second-largest lender by assets. The results are strong and in line with previous estimates of 2012's financial sector performance in Indonesia. Overall, lending growth in 2012 was expected to increase by around 24 percent.

Bank Rakyat Indonesia:

      2011    2012      YoY
Net Profit
  15,083   18,521    22.8%
Total Loans
 283,583  348,227    22.8%
Total Assets  456,531  535,209    17.2%
Total Deposits  372,148  436,098    17.2%

in billions of IDR Rupiah
Source: Bank Rakyat Indonesia, Financial Update Presentation Full Year 2012

With around 31 percent, the micro loan (the most profitable segment in BRI's loan portfolio) is still the largest loan segment of BRI's total outstanding loans. The high loan growth at the end of 2012 was inflicted by the growth recovery in micro, small commercial and medium in Q4-2012. The percentage of non-performing loans (NPL) has been reduced to 1.78 percent from 2.30 percent in 2011.

The main source of BRI's liquidity is savings (of third party funds), which grew over 19 percent compared to 2011. In combination with a decline in deposit rate, it has resulted in a decreasing trend of cost of fund.

Challenges and Opportunities in 2013

Indonesia's financial sector is showing robust growth due to the country's strong economic performance. This results in higher household income and consumption, more focus on infrastructure development, and more (micro and small-scale) entrepreneurs. All these matters contribute to the performance of a commercial bank. Moreover, Indonesia's borrowing costs are historically low due to the Central Bank's benchmark interest rate of 5.75 percent since February 2012.

In 2013, lending by commercial banks is estimated to grow by 24 percent again according to Indonesia's Central Bank. Moody's Investors Service stated that prospects of the Indonesian banking system remain stable for the next 12-18 months.

In its presentation, BRI also assessed the challenges that Indonesian lenders have to cope with in 2013. These are: higher inflationary pressures due to the government's decision to increase electricity tariffs, a weakening rupiah (IDR), more competition in loans and deposits, tightened liquidity due to a higher loan-to-deposit ratio (LTD), and maintaining a stable operating expense (opex) during the expansion.

Today, Bank Rakyat Indonesia's shares climbed 0.63 percent.

Bank Rakyat Indonesia's share performance in 2012