Gojek-backed Bank Jago hits first profitable year in 7 years (Updated)

Update (March 11, 11:30 a.m.): Added details about the difference between Bank Jago’s net profit before and after tax.

Indonesia-based Bank Jago earned 86 billion rupiah (around US$6 million) net profit after tax in 2021. It’s the first positive year for the digital bank after it recorded annual losses for the past six years – well before the new management, backed by regional super app Gojek, took over in 2019.

Bank Jago posted a US$8.3 million net profit after tax in the fourth quarter of 2021, its largest rise during the year.

However, this figure was largely due to accounting for deferred income tax, which inflated the post-tax numbers by around US$5.4 million. Meanwhile, the net profit before tax for 2021 – which in this case is a better reflection of the digibank’s operating performance – was US$630,000.

A major contributor for this jump in profits was a surge in loan disbursements, which rose almost 6x to US$378.1 million in Q4 2021. This growth could be attributed to Bank Jago’s partnerships with Gojek, investment app Bibit, stock trading platform Stockbit, and several peer-to-peer lending firms in Indonesia.

“We’re coming from a low baseline, that’s why the percentage of the bump seems really high,” Kharim Indra Gupta Siregar, the digibank’s president director, said in a statement.

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Along with the uptick in loans, Bank Jago’s income from interest saw an over sevenfold increase to US$45.7 million. Meanwhile, its interest expenses only widened by around 2.5x to US$4.4 million. Thus, the net interest income went up by more than 9x to US$41.3 million.

The company also boosted its net interest margin – a key profitability metric – to 7.4% from 4.7% in the same period the previous year.

In a statement, Bank Jago said that despite the surge in disbursements, only 0.6% of loans are non-performing.

Another factor in the bank’s profitability is the increase in the number of current account savings accounts (CASA) it handles, which is a term for both savings and checking accounts.

The so-called “low cost” offering currently covers 45.6% of the bank’s total cash handled across its savings products, compared to 27.2% the previous year. At the same time, the total cash in the savings accounts of Bank Jago users increased to roughly US$257.7 million, a 4.5x surge from the previous year. It currently has more than 1.4 million customers.