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Issuer Flash: Bank KB Indonesia

Issuer: Bank Kb Indonesia | Document: Issuer Flash | Date: 2026-11-02 | Event: 9m 2026 Results

Report date: 2026-11-02 Event date: 2026-09-30 Event title: 9M 2026 Financial Statements

1. Flash Conclusion

Bank KB Indonesia's unaudited consolidated financial statements for the nine months ended 30 September 2026 weaken the near-term standalone earnings assessment within the existing parent-supported turnaround view. The group recorded a loss attributable to owners of IDR184.2bn, compared with a profit of IDR288.1bn in 9M 2025. On a calculated basis, subtracting the IDR18.6bn attributable profit reported for the first half implies a loss of approximately IDR202.8bn in the third quarter. Although nine-month net interest income improved, it did not prevent an operating loss. The evidence points to a fragile earnings buffer, not a completed standalone recovery.

The comparison needs qualification: the prior-year statements include a large positive non-operating item absent in the current period, so the swing in attributable profit is not solely a decline in recurring banking income. Nor do the reported statements by themselves establish a new parent support commitment, a deposit outflow event, or a breach of regulatory requirements. The support-led senior-credit framework remains relevant, but the capacity to absorb credit and valuation costs from internally generated earnings remains a central weakness. Expected support from KB Kookmin Bank and the wider KB group is not an explicit guarantee of any instrument.

The Event date above is the reporting-period end, not a verified public release date. The IDX-hosted package contains a directors' statement dated 30 October, but the independently verified public posting date is unavailable. The financial statements are unaudited; the presence of historical audit metadata in the form should not be mistaken for a current-quarter audit opinion.

2. Earnings: Higher Net Interest Income Did Not Restore Profitability

The statements report interest income of IDR4,195.5bn for 9M 2026, compared with IDR4,082.3bn in the corresponding 2025 period. Interest expense was IDR3,142.0bn, versus IDR3,181.4bn. The difference, before considering any separate sharia-income and expense components, is approximately IDR1,053.5bn, up from IDR900.9bn. This measure is calculated directly from the disclosed interest lines and is not the bank's reported net interest margin. It suggests better interest income generation, but it cannot establish a durable margin recovery without average earning assets, funding costs, and the bank's own NIM disclosure.

The improvement did not cover the bank's wider expense burden. The filing reports an operating loss of IDR195.1bn in 9M 2026, compared with an operating loss of IDR171.8bn a year earlier. General and administrative expenses declined to IDR523.3bn from IDR633.1bn, while rent, maintenance and improvement costs rose to IDR147.6bn from IDR103.9bn and other operating expenses increased to IDR691.7bn from IDR647.4bn. The disclosed realised trading loss on marketable securities widened to IDR207.2bn from IDR42.6bn. The package does not provide a complete explanation of each expense driver, so the loss should not be attributed to one cause alone.

Below the operating line, a comparison item materially affects the year-on-year result: the reported non-operating line was negative IDR41.0bn in 9M 2026 versus positive IDR549.4bn in 9M 2025. Loss before tax was IDR236.1bn, compared with profit of IDR377.6bn. A tax benefit of IDR46.9bn partly offset the current-period loss, while the prior-year tax expense was IDR88.9bn. Loss from continuing operations was IDR189.2bn. Discontinued operations contributed IDR5.4bn of profit, producing a total loss of IDR183.8bn, of which IDR184.2bn was attributable to owners. These distinctions matter because the headline swing combines a weak operating result, the loss of a prior-year non-operating benefit, tax effects, and discontinued operations.

IDR bn, consolidated 9M 2026 9M 2025 Credit reading
Interest income 4,195.5 4,082.3 Higher, but insufficient on its own to establish normalized margins
Interest expense 3,142.0 3,181.4 Lower absolute charge; deposit mix and funding cost remain to be checked
Operating loss (195.1) (171.8) The underlying reported operating result remained negative
Profit / (loss) attributable to owners (184.2) 288.1 Prior-period non-operating income limits a like-for-like comparison

The 9M filing does not separately present the standalone July-to-September quarterly result in the selected income-statement columns. The implied IDR202.8bn third-quarter attributable loss is therefore a calculation from the current cumulative figure and the H1 flash's IDR18.6bn, subject to rounding and comparability of the two unaudited group packages. It is useful for identifying the direction of the quarter, but not a substitute for a reconciled company-provided quarterly bridge.

3. Balance Sheet and Credit Constraints

Consolidated total assets were IDR90.44tn at September-end, compared with IDR89.79tn at end-2025 and IDR93.0tn at June-end as reported in the prior flash. The decline from June is material to monitor, but the balance-sheet totals do not identify whether it resulted from a planned balance-sheet action or from funding pressure. At September-end, gross third-party and related-party loans in the filing totalled approximately IDR51.25tn before the IDR2.79tn loan-loss allowance, compared with IDR49.87tn and IDR2.78tn, respectively, at year-end. These loan figures exclude any separately presented sharia financing components and are not an NPL ratio or a measure of allowance coverage for non-performing loans.

Third-party time deposits declined to IDR35.24tn from IDR37.83tn at end-2025; related-party time deposits fell to IDR0.01tn from IDR0.10tn. Third-party current accounts declined to IDR8.64tn from IDR8.79tn, while related-party current accounts were small. These are selected deposit lines, not a calculation of total customer deposits, CASA, deposit concentration, or a liquidity ratio. Their direction warrants attention because retaining stable funding is a key element of the turnaround, but they do not establish the size or cause of any overall customer deposit movement.

Third-party savings deposits also fell, to IDR6.36tn from IDR7.88tn. Over the same period, third-party borrowings rose to IDR12.10tn from IDR9.82tn and securities sold under repurchase agreements rose to IDR3.51tn from IDR1.46tn. These simultaneous balance-sheet movements point to a changing funding mix; they do not establish that one funding source directly replaced another, or reveal borrowing maturities, funding costs, or stress.

Total liabilities were IDR82.38tn and total equity IDR8.06tn at September-end, versus IDR81.75tn and IDR8.04tn at year-end. Equity attributable to owners increased slightly to IDR8.09tn despite the reported loss. The statement of changes in equity shows IDR207.0bn of other comprehensive income, principally IDR205.3bn of after-tax property and equipment revaluation gains. This helped offset the loss, but it is not the same as recurring operating profit or a confirmed fresh capital contribution. Neither the equity balance nor the interest lines establish the bank's current regulatory capital headroom.

Asset quality remains a critical open question. The June package reported consolidated gross and net NPL ratios of 9.98% and 6.22%, respectively, and consolidated total capital adequacy of 17.00%, with NSFR of 104.00%. Those are June figures, not September measurements. The 46-page September package reviewed for this flash does not establish updated gross or net NPL ratios, CAR, LCR, NSFR, or a complete credit-cost bridge. The modest change in the gross loan allowance against the larger loan balance cannot establish stable asset quality: changes in classification, recoveries, write-offs, restructured exposures and collateral values all matter. The earlier risks of elevated problem assets and limited liquidity-ratio headroom must therefore remain monitoring issues rather than being carried forward as confirmed September values.

4. Creditor Implications and What To Watch

The 9M result is consistent with a still-fragile standalone recovery: improved interest income has not yet converted to sustained positive operating earnings, and the loss reduces the internally generated buffer available against further credit costs. The lower selected time-deposit lines also make the composition and cost of funding important. The existing support-inclusive senior view remains conditional on the KB group's strategic commitment and ability to provide support; the filing does not establish a new injection, an enforceable liquidity facility, or a legal guarantee. Any assessment of senior, subordinated, or capital instruments still requires the relevant debt documents and ranking or loss-absorption terms.

For the next review, obtain September regulatory capital, NPL and restructured-loan schedules, LCR and NSFR, deposit composition and concentration, and a company explanation of the 9M operating and trading results. Confirm the actual public release date and any subsequent disclosures directly from the issuer or exchange. The 29 May 2026 additional discussion identified the links among earnings, funding, asset quality and parent support; the current statements provide new evidence on earnings and selected funding lines but do not resolve those broader questions. Its comprehensive summary-scope verification remains outstanding.

5. Sources