20261005_BJBR_Laporan Informasi dan Fakta Material_32163452_lamp2.pdf

10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable

 sector staff. The trade-off of its competitive advantage due to the localised focus is more
 constrained growth potential, with much of the eligible payroll base in its provinces already
 served.


 Payroll-Focused Loan Book: Payroll lending accounts for around three-quarters of
 consolidated group loans and is tied largely to public-sector payrolls. We believe these
 loans have lower risk, as repayments are deducted directly from borrowers' salaries and
 they tend to have stable incomes. However, future loan growth is likely to be driven
 increasingly by business loans, which carry higher risk than the payroll book.


 Moderate Pressure on Asset Quality: BJB's non-performing loan (NPL) ratio rose to 3.3%
 by end-June 2026 (four-year average: 2.0%), driven by higher NPLs in its corporate and
 micro, small, and medium enterprise segments. Its loans-at-risk ratio also increased, to
 10.2% (four-year average: 8.0%). However, we expect further deterioration to be contained,
 as some of these problem accounts have been fully provisioned for and are likely to be
 written off over time.


 Softening Profitability: We expect BJB's operating profit/risk-weighted assets to ease to
 around 1.7% over the forecast period to end-2027, as loan growth remains modest and
 operating expenses remain elevated. Bank Indonesia's 100bp policy-rate rise in mid-2026
 should also lift funding costs ahead of asset-yield repricing, given BJB's considerable
 institutional deposits, which reprice quickly. Nevertheless, relatively high yields on its
 consumer payroll book will continue to support a wide margin through the cycle.


 Adequate Capitalisation: We expect BJB to maintain an adequate capital buffer, with its
 common equity Tier 1 ratio staying broadly stable above 14% (June 2026: 14.5%). Capital
 accrual is likely to remain modest, constrained by a high dividend payout of around 78% and
 softening profitability, but this is mitigated by modest risk-weighted asset growth. The
 buffer is thinner than the peer average but remains comfortably above regulatory
 requirements.


 Stable Funding and Liquidity: BJB's loan-to-deposit ratio improved to 87% by end-1H26
 (end-2025: 92%) and its liquidity coverage ratio of 207% is comfortably above the
 regulatory minimum. Its ties to regional governments support stable funding volumes, even
 though such placements are generally made at market rates and have limited cost benefits.
 Its deposit franchise is less developed than those of higher-rated peers, with a current and
 savings account ratio in the low-40% range. Deposits are also comparatively concentrated,
 although its large deposits are sticky as they are mostly from regional governments.


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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable

 RATING SENSITIVITIES

 Factors that Could, Individually or Collectively, Lead to Negative Rating
 Action/Downgrade

 A downgrade of BJB's National Long-Term Rating would most likely arise from a weakening
 in its overall credit profile relative to the universe of entities on the Indonesian national
 rating scale. This could result from a decrease in the central government's ability or
 willingness to provide extraordinary support and a simultaneous deterioration in the bank's
 standalone credit profile.


 BJB's standalone credit profile is most vulnerable to a material deterioration in its asset
 quality and loss-absorption buffer, given its capitalisation and loan-loss coverage are below
 the average of peers. This could happen if its NPL ratio increases to, and is sustained at,
 above 4% without being mitigated by higher loan-loss allowances or an increase in the
 capital buffer.

 Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

 An upgrade of BJB's National Long-Term Rating would most likely arise from an increase in
 the government's propensity to support Indonesia's banking system in general or the bank
 specifically. This could stem from more explicit statements of support from the government,
 or a significant increase in the bank's systemic importance. However, we believe this to be
 unlikely in the near term.


 We may also upgrade BJB's National Long-Term Rating if we believe that its standalone
 profile has improved significantly. This could happen over the medium term if we believe
 that its business profile has strengthened materially, with a more diversified franchise that
 enables it to sustain growth and profitability through business cycles without
 compromising on risk-taking.

 REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF
 RATING

 The principal sources of information used in the analysis are described in the Applicable
 Criteria.

                                                     RATING ACTIONS



      ENTITY / DEBT                      RATING                RATING              RATING                    PRIOR 
                                          TYPE                                      ACTION 

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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable


      PT Bank Pembangunan                 Natl LT               AA-                  Affirmed                  AA-
      Daerah Jawa Barat dan                                     (idn) Rating                                   (idn) Rating
      Banten Tbk                                                Outlook                                        Outlook
                                                                Stable                                         Stable


   VIEW ADDITIONAL RATING DETAILS


 FITCH RATINGS ANALYSTS

 Hanif Pradipta
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 hanif.pradipta@fitchratings.com
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 elaine.koh@fitchratings.com

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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable

 Additional information is available on www.fitchratings.com

 PARTICIPATION STATUS

 The rated entity (and/or its agents) or, in the case of structured finance, one or more of the
 transaction parties participated in the rating process except that the following issuer(s), if
 any, did not participate in the rating process, or provide additional information, beyond the
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 APPLICABLE CRITERIA

 National Scale Rating Criteria (pub. 23 Dec 2020)
 Bank Rating Criteria (pub. 09 May 2026) (including rating assumption sensitivity)



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 Endorsement Policy

 ENDORSEMENT STATUS

 PT Bank Pembangunan Daerah Jawa Barat dan Banten Tbk                                                                  -


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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable

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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable

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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable

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10/5/26, 1:21 PM                                            Fitch Affirms Indonesia's Bank BJB at 'AA-(idn)'; Outlook Stable




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