Below is a list with tagged columns and company profiles.

Today's Headlines Banking

  • Non Performing Loans (NPLs) May Rise in Indonesia's Banking Sector

    Chances are big that the banking sector of Indonesia will see the non performing loan (NPL) ratio rise up to the range of 3.0 - 3.5 percent in 2017. Anton Gunawan, Chief Economist at state-controlled Bank Mandiri, says the rising NPL ratio is not so much caused by the lower quality of credit in Indonesia's banking system. The bigger problem is rising "special mention" loans, a loan grade that refers to assets that pose potential weaknesses that require close attention.

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  • Royal Bank of Scotland NV Ends Business Activities in Indonesia

    Indonesia's state news agency Antara reported that the Financial Services Authority (OJK), the government agency that regulates and supervises the financial services sector, revoked the license of the local unit of the Royal Bank of Scotland NV (RBS NV), hence effectively ending the company's business in Indonesia. The revocation was conducted on request of the lender's headquarters in the Netherlands. This request was sent on 1 November 2016. The bank had a long history in Indonesia. RBS NV started operations in 1969 in Southeast Asia's largest economy under the name ABN AMRO BANK NV Indonesia.

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  • Thailand's Kasikornbank Interested to Acquire Bank in Indonesia

    Kasikornbank, the fourth-largest bank in Thailand, expressed its intention to acquire a bank in Indonesia. However, in line with the content of the ASEAN Banking Integration Framework, this plan cannot be carried out rapidly. Meanwhile, Indonesia's Financial Services Authority (OJK), which regulates and supervises the financial services sectors in Indonesia, only allows a foreign investor to acquire a majority-stake in small Indonesian banks (categorized under the BUKU 1 system) provided the foreign investor purchases two (small) banks and merge these into one entity.

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  • Credit Growth in Indonesia: Accelerating in October 2016

    Credit growth in Indonesia improved in October 2016 after touching a low in the preceding month. In October credit growth in Indonesia was recorded at a pace of 7.4 percent year-on-year (y/y), reaching IDR 4,246.6 trillion (approx. USD $314.6 billion), accelerating from a growth pace of 6.4 percent (y/y) in September. This development is caused by Bank Indonesia's lower interest rates although the victory of Donald Trump in the 2016 US presidential election may have curtailed demand for credit due to the higher degree of uncertainty about future US political and economic policies.

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  • Credit Growth in Indonesia Remained Flat in September 2016

    Credit growth in Indonesia is expected to have continued its slide in Q3-2016. On an annual basis, credit growth may have eased to 6 percent. Bank Indonesia, the nation's central bank, still upholds its 2016 credit growth target of 7-9 percent (y/y) as it eyes an improvement in credit disbursement in the last quarter of the year. Slowing corporate credit growth signals that firms are less enthusiastic to engage in business expansion and investment, while easing individual credit growth implies that consumers are less eager to obtain loans for the purchase of property, cars and motorcycles.

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  • Banking Sector Indonesia: NIM and Credit Quality Improve

    The net interest margin (NIM) of Indonesian banks rose while the nation's credit growth slowed and economic growth remained 'bleakish'. In June 2016 the average NIM of Indonesian banks was recorded at 5.59 percent compared to 5.32 percent in the same month one year earlier. The higher NIM is the result of improved credit quality, reflected by a lower non performing loan (NPL) ratio. NIM is the difference between interest income generated by banks and the amount of interest paid out by banks to the lenders. A higher NIM implies that the bank is more profitable.

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  • Indonesian Banks Reject Lower Net Interest Margin Plan

    Indonesian banks support the country's financial authorities' intention to cut lending rates to single digit margins (in a bid to boost credit growth and economic activity). However, these banks argue that lower interest rates should be the result of enhanced efficiency at banks, not by the Financial Services Authority (OJK)'s plan to cut banks' net interest margin (NIM). Earlier this year, the OJK - the government agency that regulates and supervises Indonesia's financial services sector - announced its plan to push state-owned banks' NIM down to the range of 3 to 4 percent.

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  • Operational Costs Major Indonesian Banks Rise in 2016

    Even though Indonesia's Financial Services Authority (OJK) has been eager to encourage local banks to raise efficiency, banks' ratio of operating expenses to operating income (ROEOI) has in fact risen. For example, the ROEOI of Bank Rakyat Indonesia (BRI) rose 406 basis points from 68.04 percent in March 2015 to 72.10 percent in March 2016. BRI's Finance Director Haru Koesmahargyo said the bank's higher ROEOI is caused by the bank's rising non-performing loan (NPL) ratio. In Q1-2016 BRI's NPL ratio rose 20 basis points to 2.22 percent.

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  • Credit Growth in Indonesia Grows at Slowest Pace in 6 Years

    Credit disbursement in Indonesia's banking sector grew at its slowest pace in six years in the first quarter of 2016. This weak performance is attributed to the slowdown in the country's real sector. Muliaman D. Hadad, Chairman of Indonesia's Financial Services Authority (OJK), said credit expansion grew 10 percent (y/y) to IDR 4,084 billion (approx. USD $300 billion) in Q1-2016. However, Hadad remains optimistic that credit expansion will accelerate in the second half of the year in line with forecasts for accelerating GDP growth. This will be a better context for businesses to expand.

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  • Indonesia Investments' Newsletter of 27 March 2016 Released

    On 27 March 2016, Indonesia Investments released the latest edition of its newsletter. This free newsletter, which is sent to our subscribers once per week, contains the most important news stories from Indonesia that have been reported on our website over the last seven days. Most of the topics involve economic matters such as infrastructure development, the current account deficit, updates on various sectors including property and banking, the controversial decision regarding the Masela LNG plant, land reclamation, and much more.

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Latest Columns Banking

  • Indonesia's Benchmark Stock Index (IHSG) up 0.17% on Thursday

    Despite concerns that Indonesia's benchmark stock index (IHSG) would weaken on Thursday's trading day (12/09), the index ended 0.17 percent up to 4,356.61 points. Indices on Wall Street and in Asia impacted positively on the IHSG and kept foreign investors increasing their stock portfolios in Indonesia. Moreover, the Bank Indonesia's decision to raise the country's benchmark interest rate (BI rate) by 25 basis points to 7.25 percent was generally well-received by investors. Banking stocks helped to support the IHSG.

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  • Fitch Ratings: Major Indonesian Banks Resilient Against Market Turmoil

    According to global credit rating and research agency Fitch Ratings, Indonesia's major banks are robust against the rupiah currency slide due to their low unhedged foreign currency exposure, strong loss-absorption cushions and - in some cases - foreign ownership. The slowdown in the economy will weigh on these (rated) banks' operating environment, but is unlikely to damage their credit profiles to any great extent. Below we provide Fitch Ratings' report. This report can also be accessed on their website.

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  • Despite Higher Idul Fitri Consumption, Indonesia May Not Reach GDP Target

    Although the holy fasting month of Ramadan and subsequent Idul Fitri celebrations always provide a boost for national economic growth in Indonesia as domestic consumption tends to peak, analysts believe that it will not contribute significantly to the government's 6.3 percent GDP growth target this year. During Ramadan and Idul Fitri (known as Lebaran), Indonesian consumers generally spend more on food products, clothes, shoes, tickets for transport and hotels than in other months, and thus lead to increased economic activity.

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  • Indonesia's Jakarta Composite Index Volatile but Slightly up Last Week

    After finishing last week with three consecutive days of gains, Indonesia's main stock index (IHSG) reached up to 4,633.11. However, its movement is still rather volatile. Property, finance and consumption stocks were sold by investors after seeing the benchmark interest rate raised by Bank Indonesia (by 50 bps to 6.50 percent) on Thursday (11/07), while metal stocks formed the main supporter of the index at the end of the week. Trading volume in the regular market hit 5.2 trillion and foreigners recorded net purchases of IDR 288 billion.

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  • Amid Weak Asian Indices, Indonesia's Main Stock Index Falls 3.68%

    Indonesia's main stock index (IHSG) fell 3.68 percent to 4,433.63 on Monday's trading day (08/07). This current level is the lowest level of the IHSG since 26 June 2013. Of the 473 listed companies, 263 were down, 21 were up and the remainder did not move. Most Asian indices fell due to concerns about China's credit crisis that may impact on the country's economic growth and that the positive US employment report will affect continuation of the Federal Reserve's quantitative easing program. The MSCI Asia Pacific Index fell 1.6 percent.

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  • Strong Rebound in Indonesia's IHSG, BI Rate Hike Well-Received

    On Friday (14/06), the main stock index of Indonesia (IHSG) jumped 3.32 percent to 4,760.74 points as financial market participants were optimistic about the effects of the higher central bank interest rate that was announced the day before. Moreover, Indonesia's IHSG was supported by a green wave across Asian stock markets, which was partly due to a strong rebound in markets in the United States on Thursday (13/06). Stocks in Indonesia's banking and property sectors were the top-gainers on Friday's trading day.

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  • Indonesia's Central Bank Keeps Its Benchmark Rate at Record Low 5.75 Percent

    The central bank of Indonesia (Bank Indonesia, or BI) decided to maintain its record low policy rate for the 15th straight month at 5.75 percent as it is considered consistent with its inflation target range of 3.5-5.5 percent in 2013 and 2014. The central bank also stated that the global economic recovery is accompanied by many uncertainties which result in a lower forecast for Indonesia's economic growth. The full press release of Bank Indonesia can be read below.

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  • Despite Growth Some Issues Block Indonesia's Financial and Property Stocks

    In its most recent report, the Asian Development Bank (ADB) forecasts Indonesia to continue its robust economic growth. Last year, the economy of Indonesia expanded 6.23 percent, and according to the ADB this figure will rise to 6.4 percent in 2013 and 6.6 percent in 2014. However, since the start of April there have been some issues that are causing Indonesia's stock indices to go down. Although believed to be only temporary, it is worth taking a closer look.

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  • Bailout in Cyprus Impacts Negatively on the Indonesia Stock Exchange

    We had hoped for a continuation of the Indonesia Stock Exchange (IHSG)'s rebound after forming a green candle. It failed, however, due to negative market sentiments brought on by the bailout of Cyprus. Also, selling pressures on American stock markets late last week blocked a potential longer rally. The IHSG felt the impact of the Dow Jones Industrial Average (DJIA) that fell after a weaker NY Empire State Manufacturing Index as well as Consumer Sentiment.

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  • BRI's 2012 Results Mark the Continued Strength of Indonesia's Financial Sector

    Indonesian commercial banks have shown good performance in recent years as economic growth of over six percent fuels loan demand from the people and businesses. Domestic consumption and investment are the two main drivers of the country's gross domestic product (GDP) growth. Together, these two components account for almost 90 percent of GDP. As such, lenders are in a comfortable position.

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