MICROCAPITAL BRIEF: Bank Rakyat Indonesia (BRI) to Add 571 Branches to Reach Rural Micro-, Small, Medium-sized Enterprises (MSMEs), Expand Agricultural Lending

Bank Rakyat Indonesia (BRI), a commercial bank owned by the government of Indonesia that offers traditional services as well as microlending, reportedly has announced its intention to add 571 branches to its existing network of 9,808 retail outlets in the country. The purpose of the expansion is to gain market share in the remote, underdeveloped and underbanked areas of Indonesia’s archipelago of about 17,500 islands, as well as to increase the bank’s lending to micro-, small and medium-sized enterprises (MSMEs).  At present, banking services in these areas are typically limited to periodic visits by bank representatives traveling by foot or carrying automated teller machines on boats.

According to a statement attributed to Mr Sofyan Basir, president director of BRI, the bank is also looking to expand its agricultural lending portfolio by allocating up to IDR 2 trillion (USD 306 million) for the acquisition of an unnamed mid-sized agricultural bank. BRI plans to combine the acquired bank with its agribusiness lending subsidiary, Bank Rakyat Indonesia Agroniaga (BRI Agro). No additional details regarding the potential acquisition have been made available.

As of year-end 2013, BRI reported total assets of IDR 606 trillion (USD 61.9 billion), a gross loan portfolio of IDR 431 trillion (USD 43.9 billion), deposits of IDR 486 trillion (USD 49.6 billion), return on assets of 5.03 percent and return on equity of 34.1 percent. As of September 2013, BRI Agro operated a network of 23 branches and reported total assets of IDR 4.7 trillion (USD 483 million), return on assets of 2.22 percent and return on equity of 13.6 percent.

By A’kos Szebeni, Research Associate

About Bank Rakyat Indonesia (BRI)

Bank Rakyat Indonesia (BRI) is a state-owned commercial bank based in the city of Jakarta, Indonesia. BRI offers retail and commercial banking services including savings accounts, loans, investment banking services and treasury products.  BRI also offers microfinance and credit products targeting small and medium-sized enterprise (SMEs). As of year-end 2013, BRI operated 9,808 retail outlets in Indonesia and reported total assets of IDR 606 trillion (USD 61.9 billion), a gross loan portfolio of IDR 431 trillion (USD 43.9 billion), deposits of IDR 486 trillion (USD 49.6 billion), return on assets (ROA) of 5.03 percent and return on equity (ROE) of 34.1 percent.

About Bank Rakyat Indonesia Agroniaga (BRI Agro)

Bank Rakyat Indonesia Agroniaga (BRI Agro) is an Indonesia-based commercial bank focused on lending to small and medium-sized enterprises (SMEs) in the agriculture sector. The bank offers credit and deposit services to retail and commercial clients through its network of 23 branches in Indonesia. BRI Agro is an operating subsidiary of Bank Rakyat Indonesia (BRI), a state-owned commercial bank. As of September 2013, BRI Agro reported total assets of IDR 4.7 trillion (USD 483 million), return on assets (ROA) of 2.22 percent and return on equity (ROE) of 13.6 percent.

Sources and Additional Resources:

Bloomberg, “Banking by Boat Spells New Client Growth for Bank Rakyat,” http://www.bloomberg.com/news/2014-02-02/banking-by-boat-spells-new-client-growth-for-bank-rakyat.html

MicroCapital, May 31, 2013, “Bank Indonesia Releases “Guiding Principles” for Branchless Banking Trial; Indosat, Telkomsel, PT XL Axiata to Offer Money Transfers for $0.21,” https://www.microcapital.org/microcapital-brief-bank-indonesia-releases-guiding-principles-for-branchless-banking-trial-indosat-telkomsel-pt-xl-axiata-to-offer-money-transfers-for-0-21/

MicroCapital, December 13, 2012, “Banks in Indonesia Claim Readiness for Branchless Banking, Pending Regulation Issuance,”
https://www.microcapital.org/microcapital-brief-banks-in-indonesia-claims-readiness-for-branchless-banking-pending-regulation-issuance/

MicroCapital, July 5, 2012, “Indonesia: Banks Introduce Rabu Microsavings Program at Indonesian Banking Expo (IBEX),”
https://www.microcapital.org/microcapital-brief-indonesia-banks-introduce-rabu-microsavings-program-at-indonesian-banking-expo-ibex/#more-19433

MicroCapital, March 31, 2010, “State Enterprises Ministry of Indonesia Gives State-Owned Bank Rakyat Indonesia (BRI), a Bank Specializing in Microfinance, Permission to Acquire Bank Agroniaga, a Bank Focused on the Agro-Business Sector,” https://www.microcapital.org/microcapital-brief-state-enterprises-ministry-of-indonesia-gives-state-owned-bank-rakyat-indonesia-bri-a-bank-specializing-in-microfinance-permission-to-acquire-bank-agroniaga-a-bank-focused-on/

MicroCapital, January 27, 2009, “Bank Indonesia Welcomes the Competition of Foreign Banks Into Indonesia’s Microfinance Sector,” https://www.microcapital.org/microcapital-story-bank-indonesia-welcomes-the-competition-of-foreign-banks-into-indonesias-microfinance-sector/

MicroCapital Universe Profile: Bank Rakyat Indonesia (BRI), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Rakyat+Indonesia+%28BRI%29

MicroCapital Universe Profile: Bank Rakyat Indonesia Agroniaga (BRI Agro), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Agroniaga#Bank_Rakyat_Indonesia_Agroniaga_BRI_Agro_

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