BRI is confident of doing business in 2024

JAKARTA -- Bank Rakyat Indonesia (BRI) has great optimism about navigating the business climate in 2024 because it has strong fundamentals, one of which is reflected in adequate liquidity conditions.

President Director of BRI Sunarso admitted that economic liquidity is currently tight, but the banking industry is still within limits that can encourage growth.

Moreover, specifically for BRI, as of September 2023 it has a good liquidity ratio. This is reflected in BRI's Loan to Deposit Ratio (LDR) of 87.76 percent. According to Sunarso, this figure shows that BRI still has room to grow.

"If the LDR is above 92 percent, it is already high, below 90 percent, in my opinion, we must encourage credit first so that the liquidity in the hands of the bank is channeled effectively and productively to the public in the form of credit," he said, in a written statement, Friday (29/12/2023).

BRI's Capital Adequacy Ratio (CAR) is at the level of 27.48 percent, which means it is far more than sufficient. To cover all banking credit risks - which refer to Basel II provisions - only a CAR of 17.5 percent is needed.

With a CAR of 27.48 percent, said Sunarso, BRI still has excess capital. Thus, Sunarso concluded that if every year BRI only needs an additional two percent CAR 'consumption', then for the next five years BRI will not need additional capital.

Banking sector optimism

Sunarso continued to explain that the optimism felt by BRI tends to be felt by the banking industry even though liquidity is tight. Sunarso, who is also Chairman of the State Bank Association (Himbara), said that the LDR of state-owned banks is in the range of 89.31 percent until September 2023, and is quite safe because it is not yet more than 92 percent.

This was supported by Himbara's credit growth which reached 10.94 percent. Even BRI itself, until September 2023, its credit will grow 12.5 percent on an annual basis or above the banking industry's credit growth which is around eight percent.

Sunarso also said that liquidity had increased sharply during the Covid-19 pandemic in the 2021 and 2022 period, with an average of over IDR 700 trillion in the banking market. However, in the period January to October 2023 the average is only IDR 564 trillion.

This shows that banking liquidity is indeed tightening. Nevertheless, he said, it could still encourage growth within limits. It has been proven that Himbara's credit growth can still grow above the banking average.

“Competition between banks is bound to occur in raising funds. We really have to encourage competition. "But what must be maintained is that this liquidity does not become concentrated in just a few certain banks," he said.

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