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Bank Jago enjoys rapid credit growth in H1
Bank Jago booked a net loss of Rp 46.77 billion (US$3.23 million) in the first half of the year, down from nearly Rp 51 billion a year earlier. The fall in the net loss followed a 695 percent annual increase in loan disbursement to Rp 2.17 trillion.
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ublicly listed Bank Jago booked a smaller net loss in the first six months as the digital bank achieved higher interest income on the back of rapid credit growth.
Bank Jago booked a net loss of Rp 46.77 billion (US$3.23 million) in the first half of the year, down from nearly Rp 51 billion a year earlier. The fall in net loss followed a 695 percent annual increase in loan disbursement to Rp 2.17 trillion.
“Our performance is still not positive because of the investment factor. We think that is normal and still in line with our initial plan. This investment will pay off in the future,” president director Kharim Siregar was quoted in a news release as saying on Monday.
The digital bank continued to invest in information and technology, application development and talent acquisition, resulting in operating expenses of Rp 183 billion.
Read also: ‘Bank Jago effect’: Small banks’ shares surge on consolidation, digital bank boost
Bank Jago, traded under the ticker symbol ARTO on the local bourse and valued at over Rp 241 trillion, is riding on the pandemic-induced growth in the digital economy. The company’s share price rose to a record-high Rp 17,000 following its latest financial statement.
The bank maintained its nonperforming loan (NPL) ratio at 0 percent, freeing itself from a huge sum of provisions made by other commercial banks during the pandemic.
With interest income growing faster than expenses, the rapid credit growth led to a Rp 139 billion net interest income in the first half of the year, up nearly 423 percent from a year earlier.
Read also: Commercial banks stick with rosy credit growth expectations
Sucor Sekuritas analyst Edward Lowis said Bank Jago was expected to break even this year and gradually increase profitability going forward.
Edward also said the digital bank’s loan disbursement was forecast to double to between Rp 4 trillion and Rp 5 trillion by year-end, which may see the NPL ratio rise to between 0.5 and 0.6 percent.
“Earnings [growth] will largely [come] from better loan channeling through partnerships with financing companies, [peer-to-peer] lenders, among other strategies. Merchant financing from the GoTo ecosystem is also projected to kick in starting [in] 2022,” Edward said in an analysis published Tuesday.
In July, Bank Jago integrated its services with those of investment app Bibit and ride-hailing and payment company Gojek. The latter, which has merged with e-commerce giant Tokopedia into GoTo, acquired a little over one-fifth of Bank Jago’s shares last year.
Bank Indonesia (BI) recently revised down its credit growth forecast for this year to between 4 and 6 percent from between 5 to 7 percent following the implementation of COVID-19 restrictions.
