PT Bank Rakyat Indonesia (Persero) Tbk (BBRI) Earnings Call Transcript & Summary

Good morning, everyone. We would like to thank you for joining us for Bank Rakyat Indonesia's Full year '25 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.

Hey everyone. Thank you.

Our CFO, Pak Royadi.

Morning.

Our Director of Micro Business, Pak Akhmad Purwakajaya.

Morning.

Our Director of Risk Management Ibu Ety.

Good morning.

Director of Commercial Banking, Pak Dippo.

Good morning, everyone.

And then our Director of Corporate Banking, Pak Riko.

Good 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. [Operator Instructions] I would now like to invite by Pak Hery, our Group CEO, to begin the meeting.

Thank you, Siaga. Good morning, everyone. So let me start with a -- to introduce the Board of Directors members here. So as approved at the extraordinary shareholder meeting on December 17, 2025, BRI has welcomed several new members to our management team. I'm pleased to introduce 5 new directors, each bringing deep experience and also strong execution capabilities. It Ibu Vivi in my left, actually used to be the Director of finance strategy and then get a new role as Deputy Group CEO of BRI. Second one is Pak Akhmad Royadi, who are with us in my right now he's the Chief Financial Officers or CFO -- or CFO here. So Ibu Ety Yuniarti, Director of Risk Management. Maybe the camera can spot Ibu Ety. Previously, SVP of Retail Risk. Pak Aris Hatanto, Director Consumer Banking, formerly the CEO of BRILife. And the last one is Pak Mahdi Yusuf, Director of Legal & Compliant, formerly CEO of Bank Lampung. The rest of Directors remain unchanged, ensuring continuously stability alongside this new appointment. First of all, before discussing our results, I would like to give you some color on the current update on the macroeconomic environments. Indonesian GDP remain resilient at 5.1% year-on-year in 2025 with household consumption continuing to support the growth. Investment, gross fixed capital formation accelerating towards the end of 2025 signaling improving business activity and also capacity 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 skew toward the upper middle segment. This is also reflected in funding trend where industry deposit growth was primarily driven by the upper middle segment, while smaller balance deposit expanded modestly pointing to slower recovery in the lower income segment. During this resilient year and even growth policy support play an important role in system such as stability and also improving liquidity conditions. So macroeconomic stability remained intact despite IDR volatility with inflation maintained at around 2.9% year-on-year and ample FX reserves, allowing Bank Indonesia to maintain supportive stance. Fiscal spending accelerated in 2025, reaching around IDR 3,400.50 trillion with a clear 4 quarter '25 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 transfers 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 in fourth quarter '25, led by upper income segment with early stabilization below fiscal support took effect. Our underground for [indiscernible] indicate a pickup in MSME activity toward year-on-year, supported by seasonal demand during Christmas and New Year. Subsidized and also cash assistant disbursement in fourth quarter and higher government spending ahead for fiscal year-end 2025. For fiscal monetary conditions has improved liquidity condition entering 2026, supporting BRI micro and retail franchise with disciplined growth and prudent asset quality. We remain well positioned to capture emerging tailwind while maintaining prudent amid global uncertainties. Ladies and gentlemen, while we take a look at the banking system in Indonesia, Indonesian banking sector remained stable with a loan growth at 9.6% year-on-year in 2025, gaining momentum since midyear alongside improving business condition and recovering credit demand. Growth remained in the high single-digit range, reflecting disciplined underwriting. Deposits expanded steadily, keeping industry LDR in the mid-80% range and indicating balanced liquidity. Profitability stay resilient with net interest margin at 4.6%, while asset quality remained manageable, while gross NPL plus/minus 2%. LaR, less than 10%. Capital level remained strong with the capital adequacy ratio in the mid-20% range underpinning system resilient compare the industry. BRI recorded relatively stronger loan growth and also structurally higher NIM and supported by a solid capital level, while asset quality is still normalizing, these 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 one is transforming the funding franchise. We explained this plan a lot with you guys and analysts. So what we have done so far, we would like to optimize the digital channel to increase business engagement and also transaction intensity driving CASA growth delivered across our cross segment and subsidiary collaboration through integrated product bundle, high-quality parallel with better IFRS balance and also ecosystem-based solutions better capture operating accounts, payroll and also supplier transaction. We also strengthened retail and wholesale synergy to accelerate low-cost funding growth. In regard of core repayment also accelerate new engine. So core repayment 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 fintechs are tracking better than 2023, 2024 cohort, which are expected to largely resolved by for 2026 for 2023 [indiscernible] and 2027 for 2025 [indiscernible]. By 2027, the portfolio is expected to be predominantly consist of the benches originated under the enhanced credit standards, supporting stronger asset quality, lower credit cost volatility and a more sustainable profitability. In Consumer, we have strengthened manpower, distribution and business process with accelerating payroll penetration through higher ETB concession, improving borrower salary profile, refocusing mortgages towards Tier 1 developer and higher income segment and, capturing parallel flow from commercial and corporate clients to enhance a cross-segment synergy. Overall, we aim to structurally improve our funding mix and asset quality while scaling new group engine to support more sustainable performance and strategic initiative execution remain our key priority through dedicated PMO across micro consumer SME and oneBRI solution, human capital and also operation to ensure disciplined implementation. Network and digital optimalization to enhance productivity and consumer experience within a stronger transaction ecosystem, strengthen micro risk management, accelerated consumer goods, including gold, bonding and also auto loan and expanded commercial and corporate capabilities to different ecosystem, penetration and also support CASA generations. So 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 rehabilitation 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 strengthen merchant stickiness. Network capability enhancements across branches and micro unit to standardize surface quality and also improve customer experience, supporting scalable ecosystem growth, strengthened cross-subsidiary collaboration to deliver bundled integrated offering. So in terms of initiative in asset quality improvement, a bit, we would like continue strengthening the 3 key pillars to reimburse underwriting discipline and asset quality, enhanced loan officers trending and recruitment added around 1,500 dedicated field collection staff and redesign role to improve recoveries and also offer our asset quality of our size. We also centralized the prescreening credit pipeline with automated monitoring to enable faster risk detection and complemented by local loan operations expertise. Refined prescreening to true sectoral and also regional risk model strengthen scoring and risk acceptance criteria and enhance the sector guidance to improve risk selection. So we also continue to monitor and optimize digital channel performance, such as BRIMO on mobile banking, Business Merchant, QRIS and also remain a key driver for retail CASA growth. BRIMO numbers of user increased by 18.9% year-on-year, reaching 45.9 million with a 57.8% penetration rate. But more importantly, we see improvement in monthly active user from 17.8 million of the user to 20 million (sic) [ 21 million ] increased by almost 18% year-on-year. And 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 productivity 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 strengthened visibility 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's means 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 patient funding structure. Ladies and gentlemen, looking forward, we aim to diversify our income sources by expanding consumer banking through several initiatives here. We increased penetration among ETB customers while driving growth in high-quality payroll. Payroll comes from the corporate client lead strengthen BRI, BRI Finance, dealer integration and implement fast-track underwriting to improve SLA. We also expand selectively through Tier 1 level of our partnership to enhance yield and maintaining also strong asset quality. We also continue scaling Pegadaian integrated gold ecosystem, reinforcing group collaboration across referral flows and also ecosystem based growth. Institutionalized regional Wealth Management team to collaborate across the segment, deepen product penetration and also drive fee income, CASA risk, and also the fund management growth. In 2025 and into 2026, Commercial and Corporate segment will serve as our tactical focus, emphasizing sustainable growth and transaction-lead relationship. For commercial corporate client, we are prioritizing transaction banking relationship to drive higher quality CASA and recurring fee income. Our focus remained on resilient and structurally expanding sectors where transaction intensity and ecosystem, they're 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 projects. Meanwhile, in the corporate segment in the strongest year-on-year growth has been driven by our agriculture, energy and also electricity, we are deepening penetration across supplier distributor, employee ecosystem. Connecting corporate and commercial clients with other segment through payroll services, supply chain financing, and cash solution. This ecosystem applaud and hand CASA capture strengthened cross-segment synergies and improved 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 improving portfolio transaction. For Consumer business, consumer loan 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 a growth focus and higher quality borrower, higher balance private payroll customers and also selective Tier 1, therefore, over exposure. Our auto loans rose 266.4% of the low base year because this -- we just started this auto loan business. Growth is being directed towards stronger segment within the BRI Group ecosystem through integrated underwriting and dealer collaborations. So 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 improve cross-referral or cross segment. For the gold business, gold installment loan up 305.9%, targeting higher network individual customers and also gross 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 assets 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 saving account continue to expand, reflecting the positive impact of retail funding initiative and improving liquidity conditions. Fee and other operating income rose 2.6% year-on-year, supported by strong gold sales at Pegadaian, higher fee based income and treasury performance, recovery income improved in quarter 4 2025 rising 12.3% quarter-to-quarter, driven by accelerated collection initiative, both claim and also the nonclaim. 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-off nonloan provision reversal of IDR 4.8 trillion related to the restructuring scheme [ hosted ] on construction company. Talk about the key metric tracking are expected as we remain in the better resolution phase. However, we started to see gradual improvement in PL and also SML in fourth quarter 2025, while profitability metric based challenges, core earnings remained 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 meaningful improvement in funding costs as the cost of funds declined by 20 basis points year-on-year, driven by a strong increase in CASA balance and balance sheet optimization. Loan at risk declined to 9.6%, falling below 10% for the first time since the pandemic, while LAR or loan-at-risk operate was maintained above 50% at 56.8%. Cost of credit was [ 3.35% ] of December 2025. Preferability metric improved quarter-to-quarter as return on assets improved 19 basis points quarter-to-quarter and ROE also improved 102 basis points 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 the provision for disaster impacted region in Sumatra. This reflect our conservative stance amid still and even demand recovery and allow us to enter 2026 with a cleaner book and also lower credit cost pressures. Loan growth, 2026. We get loan growth of 7% until 9%, yes, reflecting a high base from a corporate disbursement in quarter 4 2025, 5.8% quarter-to-quarter growth. Growth is expected to be driven preliminary by consumer, commercial and also corporate segment. Net interest margin, 2026, we guide NIM at 7.4% to 7.8%. Assuming for rate cut -- fewer recut of 1, 2 times, a more normalized liquidity environment compared 2025. For 2026, we get cost of credit at 2.9% until 3.2% supported by continued normalization and micro asset quality. In 2025, net NPL downgrade improved sequentially each quarter that debt intake decline and SML time 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 risk 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% to 43%, reflecting disciplined cost management while continuing to invest in a lot of business 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 financials in more detail. Pak Royadi, please your turn.

Thank you, Pak Hery. Let me now walk you through our financial performance, starting with the balance sheet. Like mentioned by Pak Hery 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 of the loan growth, particularly in micro segment. Loan and financing provision grew 2.5% year-on-year as we maintain provision level while also utilizing we first built during the pandemic to absorb bad debt write-offs. Provision efforts remain elevated at 5.46% of total loans compared to around 4.1% pre-pandemic level. On the funding side, the deposit grew 7.4% year-on-year, supported by strong 12.47% increase in CASA, where our leverage modestly increased to 6.5x in 2025, increased from 6.2x in 2024 Next, we move to funding structure. We continue to see good well improvement in the mix, supported by internal initiatives and a relatively supportive liquidity environment. Total deposits 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%. So this is the level of all-time high for BRI in the of the CASA ratio. While the improvement partly reflects 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 third quarter 2025, supported by improvement in system liquidity following monetizing as benchmark rate cuts typically translate it alike. The pricing become more visible starting in third quarter. The decline was mainly driven by time deposit costs, which were quite significant, 58 basis points Q-on-Q as competition is current account and saving costs remain -- saving costs remain relatively stable. Savings grew strong at 4.4% Q-on-Q while saving costs increased only 3 basis points Q-on-Q, keeping our total saving cost below 50 basis points. This reflects a healthier funding mix and disciplined pricing supporting margin resilience. If we discuss further about saving, our structures align with our system liquidity structure where balance remain concentrated in the operative affluent segment ensuring we are positioning where liquidity growth is the strongest. Total saving 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 spaces and reflecting successful penetration in the higher-value customer. Within the affluent segment, the strongest growth came from balance above IDR 5 billion, which expanded by 199% or double, consistent with broader micro liquidity trends and improve wallet capture. On the side note, we also observe improved funding retention trend. If you see in this graph, with mainly affluent balancing surpassing the prior year's 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 12.3% year-on-year, reflecting ongoing portfolio consolidation and continued focus on asset quality and recoveries. In contrast, consumer, commercial and gold pawning pounding segment supported of overall growth driving the total loan increased 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 in the process of strengthening the business model in micro so that it will be more fit going forward. We do maintain 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 consolidate loan also rose from 10% to 11.6%, supporting overall yield resilience. Next, to provide more color on commercial and loan growth, growth was well diversified, with the top 3 sector contributing 43% of 2025 disbursement led by state budget project, energy and construction. Around 56% of disbursement were linked to value chain ecosystem. So this is our growth here. While 44% came from total regional sector players. Loan utilization lean more investment financing indicated project and capacity expansion. Meanwhile, corporate growth was driven by -- 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 [indiscernible] customer, generating more stable and granular funding flow and improving transaction feasibility. Over time, this ecosystem-based model is expected to enhance relationship depth, improving risk monitoring through better cash flow transparency and support more feasible portfolio growth. Next, as highlight 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 Hery 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 debt growth passive income 48% year-on-year. Consolidated lending, it 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 funds to remain broadly stable. Our LDR stood at 91.6% (sic) [ 91.4% ] versus 86.5% in 9 month 2025, reflecting the balance sheet optimization. Earnings total assets increased year-on-year with liquidity prudently managed with our earlier targets 90% to 92% and supported by stable retail CASA 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 with Micro increased 21% to 27.2% and also improvement in better cost of funds. Loan yield remains stable at around 12.9%. In terms of noninterest 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 initiatives, additional collection staff in place, early improvement were visible in fourth quarter 2025 and recovery reps, we expect to normalize to 50 to 56 in 2026 and operating expenses increased 7.7% year-on-year. But 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 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 nonloan provision reversal last year. 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. Noninterest income increased supported like discussed before, the higher fee income, significant growth of treasury transaction and net gold sales benefiting from high gold price in 2025. Pegadaian strengthened its ecosystem through B2B partnership and deeper integration within the BRI Group, leveraging BRI customer base and bring more reps to distribute Pegadaian product more widely. As a result, net gold free 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 of field collection staff. And we expect it is a normalized 50% to 55% in 2026. For 2026, we target our OpEx to asset ratio is 3% to 4% and maintain cost-to-income ratio between 41% to 43%. While we continue to add manpower to strengthen capabilities, productivity improvement and ecosystem cross selling are expected to keep cost manageable and support consumable earning growth. And 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%. For the medium term, we aim to gradually optimize our capital structure by bringing total CAR closer to 20%, supported by stronger loan growth. And we plan also to continue high dividend [indiscernible] to shareholders here. So full year 2024, dividend payout was 86%, that paid in 2025. And then for the full year 2025, we are currently finalizing the full year dividend with the intention to maintain higher-than-normal payout ratio here. So our CAR level is above 20% and our growth is [ 7% to 9% ]. Going forward, we expect we can still maintain pay dividend higher than our normal. And then 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 for year 2024. With that, I would like to turn the presentation over to Pak Akhmad, our Director Micro, to share more on the Ultra Micro and then Micro business segment. Pak Akhmad, 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 pawn 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 good 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 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 pawn lending and savings will continue to serve as part of a 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 to -- for gold remain supported by global uncertainty and portfolio diversification trends also stronger global growth and dollar index trend 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 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. Micro loan growth declined by 4.2% year-on-year in 2025 as we continue to focus on asset quality, collections and funding. This included strengthening operations by adding providers in all Micro units, deploying fuel collection staff for written of phone, tightening underwriting standards and streamlining risk and operation across the Micro segment. Micro per 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 monthly Briguna or Micro per loan staff in all BRI unit of around 450 staff since July 2025 and stronger partnerships with civil servants, military and police. The partnerships expand reach into rural areas where BRI's is micro network is already strong there. KUR maintained healthy growth of 1.8% year-on-year. Meanwhile, Kupedes growth was subdued as we continue to clean up the 2023 batch and resolve legacy [indiscernible] structure restructured loan in 2025. Borrowers per loan officer decreased further to 456 (sic) [ 455 ] 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 remained steady at IDR 17.9 billion (sic) [ IDR 17.3 billion ] with productivity expected to increase as we execute on our Micro transformation agenda. To strengthen the Micro foundation, we are focusing on 3 key areas. First area is human capital that we're strengthening organizational capabilities through extensive reskilling and retraining programs, redesign recruitment career journey and the remodeling of Micro loan officers rose to improve productivity and credit discipline. And 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 risk management through improved credit scoring models, strengthened underwriting processes and added fuel collection to ensure better collection. Now I would like to turn the presentation of our Director of Risk, Ibu Ety, to discuss our asset quality. Please Ibu Ety, thank you.

Thank you, Pak Akhmad. I will read my notes to make sure that all concern will be answered. Moving into loan quality, our consolidated NPL increased 30 bps year-on-year from 2.78% to 3.07% driven by increasing the Bank-only NPL by 35 bps from 2.94% to 3.29%. In the Bank-only, the increase in 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 bps YoY. In the Micro segment, NPL formation remains high as 2023 [ Kupedes ] stage 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 Kupedes 2023 as well. However, we see slight optimism in 2026 as asset quality trends have improved sequentially in 2025. And our SML ratio has improved by 60 bps 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 '24 to 1.7% in 2025. Next, into the Consumer segment, increasing NPL mainly driven by 2 factors. One is mechanical. It is because of, in the third quarter, we implemented a single debt principle that raised the NPL Q-on-Q by 25 bps. And secondly, on the year-on-year basis, we also done some soft lending in the mortgage product. We increased the NPL downgrades by roughly 60 bps to 3.9% NPL ratio by end of 2025, the downgrade is mostly coming from developer on Tier 1, especially in Jakarta, Bandung, Surabaya and Jokjiariya. These are the loans with average house price below 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 lowered mortgage approval need for our regional CEO from IDR 25 billion to IDR 15 billion. And three, we also implement new risk assessment 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. Next in the small medium segment, NPL increased by 60 bps or IDR 1.7 trillion to 5.5% driven by legacy pick-off 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 used 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. Hence, 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 seen a small improvement of 3 basis points. But actually, our 2 biggest subsidiaries have shown significant improvement in loan quality. First is Pegadaian, NPL improves by 25 bps year-on-year from 0.63% to 0.37%. And PNM also improved by 60 bps from 2.3% to 1.7%. LAR ratio also improved significantly in PNM, especially from 13.7% in '24 to 8.5% in 2025. Moving into next page. In terms of provisioning appetite, our loan provision 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 points from 10.7% to 9.6%. However, the composition of NPL portfolio to total loan at risk is increasing from 26% to 32%. Hence, we still maintain our coverage ratio of NPL above 170% and coverage of LAR ratio to around LGD level, which is 55% to 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 of overlay increased [indiscernible] CoC around 3 basis points. Based on our assessment from the regional team, total portfolio impacted will be around IDR 2.2 trillion consisting around IDR 1 trillion in KUR, IDR 200 billion in Kupedes and around IDR 1.1 trillion in Small segment, but we still do the mapping until end of March. As of December, we already restructured around IDR 440 billion, and most of the loans still in current collectibility. 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-on-year. And 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 bps to 1.9%. Last year, in the fourth quarter, we have 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 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 and within 2 months, we were able to collect roughly IDR 250 billion nonclaim 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 full 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. Therefore, we may recruit until 5,000 fuel collector. Last page regarding loan collective, we would like to explain about the progress in Kupedes 2023 bookings as everyone is concerning about this. 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. Hence, 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 therefore, remaining IDR 21.4 trillion is under current category. If you 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 a time, IDR 126 trillion. And as of December '25, the remaining outstanding in our balance sheet is roughly IDR 49.6 billion. We already written off IDR 1.6 trillion of the remaining IDR 35.8 trillion is still under current category. We expect that most of the portfolio will be maturing in 2 years, which is 2027, with projectors written-off portfolio around IDR 11.7 trillion or another IDR 10 trillion in 2 years. That's why I'm explaining before that in terms of NPL downgrades maybe in 2026 will be only slightly lower. But 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 Kupedes risk rate, limiting maximum top-up and also setting the top-up criteria. We are seeing better performance from Kupedes in 2024 bookings and further improved in 2025 bookings. As mentioned here in the presentation on the right bottom side, average SML formation for 6 months on book has shown improvement from 6.3% in 2023, lower into 5% in '24 and then further lower into 3.9% in '25. I think that's all from me. And now I would like to turn the presentation back to Siaga to organize Q&A.

Okay. Hi, everyone. So before I summarize the presentations, I would like to touch a bit about ESG. So 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. So to summarize our presentation this morning, this year reflects disciplined execution in normalizing cycle. We delivered sustained balance sheet growth, strengthened operating performance and preserved 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 technical 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 segments. 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 segments, 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 capabilities strengthen our core. It allows 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. Because in the end, sustainable value creation is not about one strong year. It is about building an institution that can thrive across cycle generation and transformations. We are building a stronger and more balanced BRI, one that can navigate cycles. With 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. So thank you so much for your trust, your constructive feedback and your patience, especially during more challenging period. Your support strengthened 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 responded and [ assigned ] by Pak Hery. And 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. Second one is the CoC outlook relating to Pak Hery mentioned before that by '27, we would have greater portfolio in Micro. And the third one is the scenario which BRI could hit lower end of guidance for CoC or reach or exceeding the CoC guidance for '26. Pak Hery?

Yes. Melissa, thank you very much for the questions. So 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 conditions, 70% covered or probably could be limited 50% covered. And 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, but still it has become our discussions with the credit insurance company. And the second one is about the CoC. So the currently Micro segment CoC remain elevated around 4.7% level, still above our pre-pandemic level. And I think if we exclude the CoC of Kupedes 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% until 2.7% around 2030 -- year of 2030. And assuming gradual improvement, like Bu Ety mentioned previously, probably we will still consider -- in this year and next year, probably still consider relatively flat net downgrade NPL. But after that, if net downgrade to NPL in Micro, for example, consistently below 2%, so we are expecting 2.5% until 2.7% in the longer run.

Thank you Bu Vivi. Now for the second question, I will invite one of the participants who raised his hand, Harsh Modi. Could you please unmute yourself?

[indiscernible]

All right. Bu Vivi.

Okay. Thank you so much, Harsh, for your questions. Yes, I mean, in the last 1 year, our saving account composition skewed towards higher net worth. If the liquidity tightens in the next 12 months, this is basically saving account Harsh. And we are able to achieve higher compositions in higher net worth, not only about pricing. So our saving account cost or the cost of saving account currently roughly around 30 to 50 basis points. And because -- and 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. So 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.

[indiscernible] In terms of liquidity?

Yes. 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. So it's really, really small actually, Harsh.

[indiscernible]

Yes. Before [indiscernible] here, I would like to give you a color. So basically, the portfolio -- the lending portfolio structures within the banks, we -- the wholesale banking is maximum 20%. The rest composition is including Micro, SME and also the consumer. Pak Riko, you can respond to the question.

Yes. 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 and which means also we are actually looking for corporate transactions, not only for lending, but we also make sure that we have the opportunity for cross-sell across the supply chain to the down below of the supply chain up to the [indiscernible]. The other part that's also very important to increase -- to enhance the profitability of the corporate portfolio is actually the cross-sell for the transaction banking. This year, in 2025, we really focused in transforming our transaction banking with our digital platform, QLola, which actually increased quite significantly in terms of the active users and also the sales volume. This is really connecting all the transaction banking with all the lending portfolio that we have to enhance the profitability of the portfolio. So hopefully, that answers your question. Thank you.

[indiscernible]

Yes, of course, Harsh. What we are focusing is, of course, there's a portfolio that does not make sense in terms of profitability. We should be able to actually walk away basically price out from the transaction. But we also see that as an overall holistic opportunity, for example, in the corporate side, we see that we have, for example, a very -- quite a thin margin, where we will see the impact of the holistic supply chains, right? So we see how much we can actually derive the transaction from the supply chain of that corporate transaction. For example, their suppliers, their distributors, there are also the -- let's say, in the agri business, we also look at it up to the farmers ecosystem. So we look at the holistic enterprise profitability for specific transaction. So that's how we decide whether we enter the portfolio or not. Thank you, Harsh.

Bu Vivi, do you want to 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 is 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 question 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's part of government program. But 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 [indiscernible], the cooperatives, the Agrinas thing, when the scheme switch into corporate loan, actually, the ROA is better off rather than the cooperative disburse in the mass market. Thank you so much, Harsh.

Pak Royadi, maybe you add in terms of the trajectory of the [indiscernible] trajectory of the ROI.

Yes. I just want to add, Harsh, in addition to that like we mentioned, basically, the higher segment, the higher the yield. We said that 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 like noninterest income, like fee-based income and then like Bu Vivi mentioned, the deposit CASA coming from this corporate. So basically, if we're talking about the total yield, so it will add like another 200, 300 basis points. So for example, the loan yield is 7%. The total yield coming from the CASA transaction fee income is relatively higher from 200 to 300 basis points. So basically, we have total yield like 8% to 9%.

All right. Thank you, Pak Royadi. We go to the next question.

Thank you, Hery. And 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 [indiscernible].

Okay. Thank you, Pak, for the questions. So I will walk through one by one, and Royadi probably can add later. The first one is about the loan growth guidance. We guide you with 7% to 9% loan growth, assuming that Micro on a consolidated basis probably will grow to until 4%, while Pegadaian growth probably lower. This -- I mean, 2025, they grew around 40% and 2026, we are only assuming double-digit growth, while PNM actually is still same environment with Rakyat, low single digit. And consumer as the new growth engine, we expect them to grow around 11% to 13%, while SME -- sorry, commercial and SME, hopefully, will grow around 10% to 15% and corporate around 8% to 10%. So for the net interest margin, we guide you with 7.4% until 7.8%. There are several assumptions here. We are assuming that there will be improvement in cost of fund. So for example, we are assuming our cost of deposit will be roughly around 2.8% until 3% by the end of this year. We're also taking into account like we mentioned previously, if anything happens with the KUR premium coverage, we're already also taking into account. So 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 -- we might meet the higher end if, for example, there will be a policy, especially in the disaster area that the KUR in disaster area will be -- should be 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 loan growth in special mention and NPL in Micro consistently below IDR 2 trillion.

Maybe Bu Ety, you would like to give another color for the guidance for the cost of credit because 2026, the guidance is lower than 2025, a little bit lower.

Thank you, Pak Hery. Thank you for guidance regarded to loan quality and CoC. For CoC 2026, we guide for roughly 10 basis points lower compared to 2025. Lastly, we expect that loan at this ratio continue to be lower, while the NPL ratio perhaps roughly like 10 to 20 bps lower as well, driven by better loan quality in the SME segment and consumer segment as well as the commercial segment, while the corporate segment continue to grow the outstanding as well. Therefore, we also expect the ratio on the NPL also going to be improved. While the micro segment, as I mentioned earlier, the downgrade pressure is still there from Kupedes 2023 as well as 2024, we also allocate relatively similar write-off budget around IDR 22 trillion for 2026. Hence, for the NPL ratio in 2026 for Micro still going to be hovering around 3.9% to 4%.

One more question actually from Pak [indiscernible] also regarding the capital allocation in '26, the dividend payment outlook.

Pak Royadi, the CFO, you have the guidance policy.

Yes, related to the dividend payment, yes. So 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. But again, because of our CAR is still 23.7%, way higher than our minimum requirement, so going forward, we can still maintain our dividend payout at least similar than last year, around 80%, 85%, 90%. But again, we still finalize waiting for the decision from our major shareholders.

[Foreign Language]. So I think -- thank you very much for analysts and also friends maybe around the world dialed with us this morning. So thank you very much for your support for BRI. So hopefully, even though the 2026 is not easy, quite challenging, we know the macroeconomic global policy, something like trade war and tension in politics also, et cetera, I think we're still optimistic maybe 2026 is better than 2025. Again, thank you very much. Hope to see you in the next 3 months, right? -- next 2 months. Okay. All right. Back to Siaga.

Thank you, Hery. Now I think that concludes the meeting today. Thank you for joining us on the 2025 earnings call. Have a good day.