Wednesday, May 29, 2024
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Bank Rakyat Indonesia (BRI) is one of Indonesia’s largest and oldest banks, having begun operations in 1895. Today, the state-owned BRI has leveraged its legacy and is among the organisations leading the digitalisation of the Indonesian economy. BRI has also established itself as a supporter of diversity, equity, and inclusion (DEI) and ESG with a range of initiatives aimed at both external customers as well as internal stakeholders.

Driving financial inclusion in Indonesia

BRI aims to be the most valuable banking group in Southeast Asia and a champion of financial inclusion by 2025, reaching out to Indonesia’s vast unbanked and underbanked population. Viviana Dyah Ayu Retno K BRI’s director of finance said that the bank expected to grow by 10% to 12% this year, with a focus on its core businesses — micro, ultra-micro, small and medium enterprises. Such companies account for 85% of the bank’s portfolio. Viviana said, “MSME entrepreneurs are the largest population group in Indonesia, representing around 165 million people, and 99% of businesses.”

BRI has built an inclusive approach around digitalisation — a key priority for the bank even before the pandemic. Today, BRI addresses the mass market in Indonesia with a hybrid business model, integrating its digital capabilities and physical presence. Viviana said, “We have the largest footprint in Indonesia. By leveraging infrastructure — in this case, our networks, people, and technologies, we are in the right position to serve the unbanked population.”

Through 2022, BRI disbursed MSME loans of IDR 849.2 trillion (approximately US$56 billion) which represented a year-on-year growth of 10.1%. The recipients were over fourteen million micro-entrepreneurs. Through a joint venture with financial institutions PT Pegadaian and PT Permodalan Nasional Madani, BRI has created a holding company with a focus on financial inclusion and literacy, adding 7.1 million new deposit customers.

Bringing ESG centre stage

ESG concerns are of immense importance for BRI and the bank has taken numerous steps to adhere to these norms. Its sustainability strategy is in keeping with national goals and global targets such as

Sustainable Development Goals (SDGs) and the Paris Agreement. Besides setting a net zero emission target for itself, BRI has issued green bonds, targeting fundraising of Rp15 trillion (approximately US$ 1 billion) and a Rp5 trillion (US$ 334 million) first phase emission in 2022. Of the funds raised, 80% will be used for environmental business activity. The bonds were oversubscribed 4.4 times.

The social aspect at BRI includes several community empowerment initiatives focused on its core MSME audience. These measures have helped the bank access the sustainability-linked loan (SLL) framework, where a company gets preferential interest rates if it meets pre-determined targets. At BRI, SLLS are linked to the bank adhering to its microloan growth target.

Making BRI a Better Workplace

Realising that DEI initiatives must be enshrined within the organisation as well as externally, BRI issued a respectful workplace policy last July. The policy enshrines its commitment to a workplace of mutual respect and free from discrimination, sexual or non-sexual harassment, bullying, and other forms of violence. BRI has implemented gender pay parity, providing remuneration considering factors like the classification of positions, length of service, workload, and performance. Moving past gender, BRI has mandated supporting employees with diverse experiences, ages, abilities, thoughts, and perspectives. The recruitment process takes a pan-regional view of Indonesia as opposed to being focused on the country’s urban centres.

Through its stated commitments to DEI and ESG, BRI has remained an attractive option for investors. In 2021, the bank raised IDR 96 trillion (US$6.73 billion), the largest rights issue in Southeast Asia. Speaking about the key success factors, Viviana said, “You must craft your story: to create and communicate an investment thesis to your shareholders and the regulators. You also must pay attention to every concern. We addressed even the minor ones at the very beginning since you cannot predict what could be a dealbreaker later. Finally, it is about the discipline of execution, and being able to manage the project very well.”

BRI’s approach across a range of different initiatives has won the bank plaudits from peers in the industry. In the recent FinanceAsia awards, the bank won top honours among Indonesia-based companies for best investor relations, best large cap company, best-managed company, best financial company, best DEI, best ESG, best CEO and best CFO.

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