Rating 331 BPR 2023: Rural Bank Report After Pandemic

Jakarta – Infobank Research Bureau (Biri) issued the results of the 2023 BPR (Bank Perekonomian Rakyat/rural Bank) rating based on the financial performance of rural banks in 2022. The rating titled “Rating 331 BPR Version Infobank 2023” was made to capture the performance of BPRs in 2021-2022.

The 2023 BPR Rating involved 1,012 BPRs – which were eligible for rating. As a result, 331 BPRs managed to achieve the title of “very good”.

The year 2022, which can be considered as the post-Covid-19 pandemic period, is still a challenging time for the BPR industry. This is reflected in the performance of the BPR industry which has not been strong, even though the intermediary function in terms of lending has been better than 2021.

The threat of deteriorating asset quality is increasingly visible, marked by non-performing loans (NPL) which crept from 6.72% in 2021 to 7.89% in 2022. Historically, the NPL of the BPR industry in 2022 is the highest since 2016, in the year-end position.

BPR credit, which grew 10.91% on an annual basis or to IDR 129.29 trillion in 2022, was also not followed by optimal growth in third party funds (DPK). In fact, it can be seen that DPK is experiencing slowing growth compared to 2021.

Last year, the BPR industry’s DPK grew 8.49% or lower than 2021 which recorded 10.23%. However, the slowdown in the BPR industry’s DPK growth appears to be more due to BPRs reducing the cost of funds by reducing expensive funds or deposits.

The evidence is that deposit growth slowed to 6.95% from 10.56%. In contrast, low-cost funds through savings actually grew higher than 2021, from 9.47% to 11.99%.

The faster acceleration of credit than funding has made BPR’s loan to deposit ratio (LDR) increase. In 2022, BPR’s LDR was recorded at 75.83% from 73.67%. This indicates that rural banks are making maximum efforts to spur income from credit in order to maintain profitability.

The results do look positive. In terms of profitability, there seems to be an improvement. Last year the national BPR industry, which in 2022 was represented by 1,441 banks, posted a profit of IDR 3.17 trillion.

On an annual basis, the profit grew 5.46%. The profit growth of the BPR industry in 2022 was better than 2021 which recorded 3.57%. But that’s the thing, there are challenges in terms of asset quality amidst the rapid distribution of BPR credit.

Then, which BPRs this year are rated “very good”? Read the full report in Infobank Magazine Number 544, August 2023 edition.

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