Bank bjb Rating Downgrade Signals Ongoing Asset Quality Pressure

Swan.my.id - Jakarta, Pemeringkat Efek Indonesia (Pefindo) has downgraded Bank bjb (BJBR) and several of its debt instruments, citing continued pressure on the bank’s financial profile, particularly asset quality.

The Bank bjb rating downgrade moved the company’s rating to idAA- from idAA. The same adjustment applies to Sustainable Bonds I. Meanwhile, the ratings for Sustainable Subordinated Bonds II, III, and IV were lowered to idA from idA+.

Pefindo also cut the rating of Sustainable Perpetual Securities I to idA- from idA. Despite the rating changes, the outlook for BJBR remains stable.

Bank bjb Rating Downgrade Reflects Asset Quality Concerns

Pefindo expects BJBR’s asset quality to remain under pressure in the short term. The assessment follows a decline in central government transfers to regional governments, which has affected the repayment capacity of borrowers, particularly in the productive credit segment.

That pressure was reflected in the bank’s non-performing loan ratio. The NPL ratio rose to 3.3% in mid-2026 from approximately 2.8% at the end of 2025. At the same time, the special mention loans ratio increased to 4.3% from 3.8%.

The deterioration also affected reserve coverage. BJBR’s allowance coverage ratio for NPLs fell to 85.8% in the first half of 2026 from 91.6% at the end of last year.

Short-Term Credit Risk Remains Elevated

The lower reserve coverage indicates weaker protection against problem loans as asset quality deteriorates. BJBR plans to conduct write-offs worth Rp814 billion this year, with estimated credit recoveries of Rp280 billion.

Even so, Pefindo projects BJBR’s NPL ratio will remain in the range of 2.8% to 3% in the short term. This projection shows that credit risk remains a key factor in the bank’s rating assessment.

The productive credit segment faces particular attention because borrowers in this segment have experienced weaker repayment capacity. Consequently, the bank’s ability to improve asset quality will remain important for its future financial profile.

Business Position and Capital Remain Strong

Despite the downgrade, the ratings continue to reflect BJBR’s very strong business position. The bank benefits from a captive market in West Java and Banten, along with very strong capitalization and a very strong liquidity profile.

However, intense competition outside its captive market limits the rating. Pefindo also identified the high NPL ratio in the productive credit segment as another constraint.

The different ratings for BJBR’s securities reflect their structural characteristics. Subordinated bonds are rated two levels below the corporate rating because the instruments may be written off under non-viability conditions.

Perpetual securities rank one level below subordinated bonds because they hold a more junior position. They are also classified as additional core capital and allow full discretion in deferring coupon payments.

Potential for Future Rating Improvement

Pefindo said the rating could be raised if BJBR substantially strengthens its financial profile. Improvements in asset quality, reserve coverage, and the bank’s overall credit risk management would therefore remain important considerations.

For now, the stable outlook indicates that Pefindo does not expect an immediate change in the rating direction. Nevertheless, developments in productive lending and the repayment capacity of borrowers will continue to influence the bank’s credit assessment.