BANKS INDONESIA
With a population that is the fourth largest in the world and a low penetration rate, Indonesia is one of the world's biggest potential banking markets.
Citibank received the Best Foreign Bank award by Finance Asia in 2017, and we have also been recognized as the Best Global Bank. We are focused on digital and were accordingly acknowledged as the best bank in consumer digital and the best bank for corporate digital, both by Global Finance. We have also received awards in other specific areas such as mutual funds, corporate social responsibility, corporate bonds, and syndicated loans. In November 2017, four Citi bankers were inducted into the top 100 bankers in Indonesia by Infobank Magazine. These are important because earlier in 2017 Citi globally targeted to be the best bank in the eyes of our clients. We do not seek to be the biggest bank, though we want to be the best bank. A few years ago, we also globally outlined our philosophy: Citi wants to be simpler, stronger, smaller, and safer. We learned our lessons in the quest to be the biggest and forgot that we are in fact a bank when we got involved in businesses that we did not understand. We used to have an insurance business and a brokerage business, and we used to own assets that we did not understand. When it comes to our matrix we focus on returns and efficiency. We want to deliver the best returns on asset, equity, and efficiency, which is a cost-to-income ratio below 50%.
The proximity of Indonesia and Thailand is a key advantage, and one of our key drivers to look to Indonesia for business opportunities. We started with trade financing, because trade in the 1960s was focused on commodities when Thailand sold some of our agriculture products to Indonesia. Since then, business has transformed. Thailand is fairly strong in the agricultural base, and we play a role outside of lending to bring investors into Indonesia to take advantage of the resources that the country has to offer, such as ample land and human resources. 2017 was better than 2015 and 2016 because commodity prices stabilized and are currently in a period of slowly catching up further. In general, 2017 was a relatively successful year compared to previous few years, and I expect 2018 to be better than 2017. Overall, we plan to grow by double digits and higher than 2017. There will be provincial elections in Indonesia in 2018 and general election in 2019, and these will play a part as well. 2018 and 2019 should be large spending years for everyone, which will get businesses rolling. We look to continue our work in petrochemical and food and beverage, as well as consumer-facing sectors. We will also emphasize on logistics, for example those related to infrastructure. The energy sector will also be in play in both 2018 and 2019.
Ijoined Bank Sampoerna in early 2014, when the bank was still in its early stages. The purpose of acquiring the bank was to ensure that we could help and nurture the growth of our colleagues in the micro and SME sector. There are around 60 million SME and micro players, and only around 30-40% are served by a formal financial institution. We compete with the informal sector, namely individual moneylenders, and are performing better than them. As a small player, we still have a great deal of room to grow, and our performance in the last three years has been positive, though banks have been leaving the micro sector in the last few years due to downturn in the commodity-driven sectors of the economy. We are growing quite well in terms of net earning assets, with growth at around 40-50% per annum in the last three years, though we only have 20 branches so far. Opening up branches can be costly, and, therefore, we leverage our strategic partners that already have a presence in more remote areas. We focus on monitoring the performance and underwriting criteria, as our main business is simply savings and loans. 2018 should be better because the impact from investment in infrastructure has started to kick in, and some of the projects are now functioning well.
In 2017, average financial growth was 7% while third-party funds grew at around 16%. Our profit was around 5% on average. In 2017, the consumer lending sector and commercial lending grew the most. In commercial lending, we saw growth in the construction sector, while in consumer lending it was mainly in housing. We will conduct an IPO in 2018; we want BRISyariah to be an open public company with greater transparency and professionalism. In terms of financing, we also want to raise new capital for three areas: IT, expanding our business through financing growth, and new brands. Our composition is commercial and retail, with commercial representing 30% and retail 70%. Our decision is to therefore focus on retail. Additionally, there are four classifications in Indonesia for financial institutions; we are currently tier two, and our capital is around IDR1-5 trillion (USD70-350 million). We want to increase our capital via an IPO to become one of the top five players in Islamic banking. We are currently the third largest amongst 13 Islamic banks in terms of assets. We target increasing our profits and revenues by between 15 and 30% and expect 2018 to be significantly better than 2017. We will focus on infrastructure such as toll roads and new energy solutions, while in retail, the focus is on customers through housing and pensions.
BANKS INDONESIA
TABLE OF CONTENTS
Interview
Dr. Bambang Brodjonegoro, Minister , National Development Planning (Bappenas)
TBY talks to Dr. Bambang Brodjonegoro, Minister of National Development Planning (Bappenas), on acquiring financing for infrastructure projects and boosting private sector involvement in the country.
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Thomas Trikasih Lembong, Chairman, Investment Coordinating Board (BKPM)
Thomas Trikasih Lembong is the Chairman of BKPM. He was a former Minister of Trade of Indonesia from 2015-2016. Prior his appointment in the cabinet, he had a long professional career. He was a Co-Founder, Chief Executive Officer, Managing Partner, and Partner at Quvat Management Pte Ltd and also served as President Commissioner at PT Graha Layar Prima Tbk (BlitzMegaplex) since 2012. He was previously employed with Principia Management Group and the Equity Division of Morgan Stanley (Singapore) Pte. Ltd, among others. He received a bachelor's degree in architecture and urban design from Harvard. He also was elected Young Global Leader by the World Economic Forum in 2008.
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Tevita Lavemaau, Former Minister of Finance and National Planning , Tonga
TBY talks to Tevita Lavemaau, Former Minister of Finance and National Planning of Tonga, on the effect of climate change on the country, its work to combat inequality, and further areas of cooperation with Indonesia.
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Dr. Tito Sulistio, President Director, Indonesia Stock Exchange (IDX)
TBY talks to Dr. Tito Sulistio, President Director of Indonesia Stock Exchange (IDX), on the strong performance of the capital markets, its goals to increase the number of listed companies, and the growing importance of digital innovation.
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Amien Sunaryadi, Chairman, Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas)
TBY talks to Amien Sunaryadi, Chairman of Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas), on preparing new block offerings, attracting greater investment into the sector, and pushing for exploration.
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Ronald Walla, President Director, PT Wismilak Inti Makmur
TBY talks to Ronald Walla, President Director of PT Wismilak Inti Makmur, on offering the public a more relevant value proposition, strengthening the ideology of Indonesia's founding fathers, and forging bigger profit margins.
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Teddy Tjokrosaputro, President Director, PT Rimo International Lestari (RIMO)
TBY talks to Teddy Tjokrosaputro, President Director of PT Rimo International Lestari (RIMO), on stepping back forcefully from the brink, using affordable housing as a springboard, and laying the groundwork for the country's future.
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In the House
As strong economic growth, an optimistic political outlook, and a partially successful tax amnesty to repatriate offshore wealth continue to drive up housing prices in Indonesia's major urban centers, demand for new housing and shares in developers plummeted in 2017.
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