Below is a list with tagged columns and company profiles.

Today's Headlines Banking

  • Islamic Finance in Indonesia: Sharia Banking is Large Untapped Potential

    Having the world’s largest Muslim population and experiencing sustained economic growth at a pace of +5 percent implies that Indonesia harbours great potential for Islamic finance (sharia banking). However, Indonesia is yet to tap the full potential of the Islamic financial services market. As an illustration, with a figure of USD $24 billion, Indonesia’s Islamic banks only held 4.9 percent of the country’s total banking assets in 2013. This is small compared to Malaysia (where Islamic banking holds a 20 percent market share).

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  • Indonesian Banking Sector: J Trust to Buy Bank Mutiara (Bank Century)

    J Trust, a Japan-based company engaged in the finance, real estate, IT system, as well as amusement sectors, is reportedly buying Indonesia’s Bank Mutiara (formerly known as Bank Century). Bank Century made headlines due to a controversial government bail-out in 2008 amid the economic crisis when the bank was said to be on the brink of collapse (the impact of which would spread to other local banks). Bank Century then obtained a capital injection of IDR 6.7 trillion (USD $573 million) from the country's Deposit Insurance Agency (LPS).

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  • Indonesian Banks’ Non-Performing Loans Rising Sharply in Four Sectors

    Although Deputy Governor of the central bank of Indonesia (Bank Indonesia), Halim Alamsyah, said that the non-performing loan (NPL) level in Indonesia’s banking sector is currently safe at 2.24 percent (well below the five percent threshold which is considered safe), the institution has been monitoring the high level of NPLs in four sectors: construction, trade, mining and social services. The bank will study why the ratio has been growing - whether it is a temporary phenomenon or not - and search the correct policy approach to address this issue.

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  • Foreign Banks in Indonesia Post Large Profit on Rupiah Depreciation

    According to data from the Financial Services Authority (OJK), foreign banks operating in Indonesia have posted great profit growth in the January to May 2014 period. Combined, these foreign banks have recorded a 94.36 percentage point growth (year-on-year) in profit to IDR 3.79 trillion (USD $323.9 million) in the first five months of this year. The reason behind this jump in profit is the sharply depreciated rupiah exchange rate. Over the course of 2013, the rupiah fell over 25 percent against the US dollar.

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  • What is on the Political Agenda of Joko Widodo and Prabowo Subianto?

    With the presidential election of Indonesia (scheduled for 9 July) becoming a battle between Governor of Jakarta Joko Widodo, popularly known as Jokowi, and former army general and Suharto crony Prabowo Subianto, it is worth taking a closer look into the ideas and policies that both candidates would like to implement if elected as the next Indonesian president, as well as their stance on specific economic issues. The viewpoints that are mentioned below are based on the documents that both parties provided to the General Election Commission.

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  • Growth of Residential Property Prices in Indonesia Still Slowing in Q1-2014

    The Residential Property Price Survey still indicates slowing growth of Indonesian residential property prices (in the primary market) in the first quarter of 2014. The Residential Property Price Index grew 1.45 percent (quarter to quarter) in the first quarter of 2014 or 7.92 percent year-on-year, lower than the growth that was recorded in the previous quarter of 1.77 percent (qtq) or 11.51 percent (yoy). The slowdown occurred in all types of homes, but in particular the medium and large homes segment.

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  • Indonesia Investments' Newsletter of 20 April 2014 Released

    On 20 April 2014, 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 in the last seven days. Most of the topics involve economic topics such as comments on the future policy of Bank Indonesia, the investment climate in Batam, an updated profile of Telekomunikasi Indonesia, IPOs in 2014, an analysis of the unprocessed minerals export ban, and more.

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  • OJK: Credit Growth in Indonesia's Banking Sector at a Safe Level

    Credit growth in Indonesia's banking sector in 2014 is estimated to range between 17 and 18 percent. This estimation is higher than the central bank's target of 15 to 17 percent but lower than credit growth in 2013. According to Indonesia's Financial Services Authority (Otoritas Jasa Keuangan, OJK), this pace of growth is at a safe level. Third party funds are projected to grow 16 to 16.5 percent, while the OJK did not provide an estimation of the loan to deposit ratio (LDR) yet although it did say that the LDR was at a safe level too.

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  • Bank Panin Syariah First New Listed Company on Indonesia Stock Exchange

    On Wednesday (15/01), the first new listing of 2014 on the Indonesia Stock Exchange was conducted. Bank Panin Syariah, provider of Islamic banking services and subsidiary of Bank Panin, became a listed company (with listed company code PNBS). Through the initial public offering (IPO), the financial institution is looking for additional capital to meet the central bank's requirement to become a BUKU 2 type of bank (see explanation below). The company aims to reap IDR 475 billion (USD $39.6 million) through the release of 4.75 billion shares.

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  • Credit Growth in Indonesia Expected to Have Slowed to 15-17% in 2013

    The central bank of Indonesia (Bank Indonesia) expects that credit growth in Southeast Asia’s largest economy will not exceed 20 percent (year on year) by the end of December 2013. Deputy Governor of Bank Indonesia, Halim Alamsyah, stated that credit growth is likely to slow to between 15 and 17 percent (yoy) in 2013 (based on a fixed rupiah exchange rate). Credit growth especially slowed in Indonesia’s consumption and construction sectors; a trend which is expected to continue in 2014.

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Latest Columns Banking

  • Minimum Threshold for Indonesia's "Bank Openness Law" Revised

    The government of Indonesia listened to the criticism that emerged after it decided to set a rather low threshold for bank accounts that are to become subject to the automatic bank information exchange program. Through Finance Ministry regulation PMK No. 70/PMK.03/2017 Indonesia's tax authorities obtain access to information on accounts held at financial institutions, including bank accounts. This new regulation makes it possible to check whether tax payers indeed fulfill their tax obligations.

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  • Which Bank Accounts Are Checked by Indonesia's Tax Authorities?

    There exists some resistance against the Indonesian government's recently announced regulation that gives tax authorities access to information on accounts held at financial institutions, including bank accounts. The regulation aims to contribute to a more transparent financial system as well as to boost the government's tax revenue realization (tax evaders will need to be more careful now authorities can monitor private and corporate bank accounts).

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  • Indonesia's Salim Group Wants to Build a "New Bank Central Asia"

    The Salim Group, one of Indonesia's biggest conglomerates (owning leading companies in various sectors of the Indonesian economy), has high ambitions in the nation's banking sector after having acquired a majority stake in Bank Ina Perdana in early March 2017. For the first time in 19 years the conglomerate, founded by Sudono Salim in 1972, is back in Indonesia's banking industry.

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  • Indonesia's Tax Authorities Can Monitor Taxpayers' Bank Accounts

    Indonesia's Tax Office now has more power to check whether people and companies indeed pay taxes. Last week the Indonesian government basically scrapped the existence of banking data secrecy by introducing a new regulation that gives the nation's tax authorities access to information on accounts held at financial institutions, including bank accounts. The new regulation should contribute to a more transparent financial system and boost the government's (much-need) tax revenue realization. However, Indonesian parliament still needs to approve the new regulation.

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  • Indonesian Financial Institutions in Focus: Bank Tabungan Negara

    Bank Tabungan Negara (BTN), market leader in Indonesia's mortgage loans sector, is expected to maintain steadily growing earnings supported by House Ownership Credit growth (in Indonesian: Kredit Pemilikan Rumah, abbreviated KPR) and stable financing costs. In fact, RHB Securities and Bahana Securities believe credit growth of BTN will outperform average credit growth in Indonesia's banking sector in full-year 2017. Both securities firm set their credit growth target for BTN at 18 percent (y/y), boosted by subsidized KPR.

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  • Low National Savings: People of Indonesia Fail to Save Incomes

    Indonesia's gross national savings per gross domestic product (GDP) remained stagnant according to a statement from the nation's Financial Services Authority (OJK) earlier this week. This indicates that Indonesian residents do not manage to save money, but rather focus on consumption. Based on data from the International Monetary Fund (IMF), Indonesia's gross national savings per GDP stood at 30.87 percent in 2015. For comparison, figures of Singapore and China stood at 46.73 percent and 48.87 percent, respectively.

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  • Financial Institutions in Focus: Bank Negara Indonesia (BNI)

    The corporate earnings of Bank Negara Indonesia (BNI) up to the third quarter of 2016 are in line with expectations. Net income of Indonesia's fourth-largest lender (by assets) rose 28.7 percent (y/y) to IDR 7.7 trillion (approx. USD $529 million) compared to net income in the same period one year earlier (IDR 5.99 trillion), supported by a 21 percent (y/y) increase in credit disbursement to IDR 372 trillion (approx. USD $28.6 billion) and the higher net interest income margin (6.2 percent).

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  • Snapshot of the Indonesian Economy: Risks, Challenges & Development

    Tomorrow (05/02), Statistics Indonesia is scheduled to release Indonesia's official full-year 2015 economic growth figure. Nearly all analysts expect to see a figure that reflects the continuation of slowing economic growth. Southeast Asia's largest economy expanded 5.0 percent in 2014 and this is expected to have eased further to 4.7 percent or 4.8 percent in 2015 on the back of (interrelated) sluggish global growth, low commodity prices, and weak export performance. Domestically, Indonesia has or had to cope with high interest rates and inflation (hence curtailing people's purchasing power and consumption as well as business expansion).

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  • Banking Sector Indonesia: OJK Needs More People to Combat Fraud

    Indonesia's Financial Services Authority (OJK), the central government's agency that regulates and supervises Indonesia's financial services sector, needs to hire hundreds of new staff in order to safeguard monitoring of the nation's banking sector and to enhance its early warning system in order to detect possible corruption cases. As up to 350 OJK workers are expected to return to the central bank per 1 January 2017, good monitoring of the banking sector is in jeopardy.

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  • Indonesia's Conventional Banks to Spin Off Islamic Units by 2024

    Indonesia's Financial Services Authority (OJK), the government agency that regulates and supervises the nation's financial services sector, is preparing a new regulation that requires conventional financial institutions in Indonesia to spin off their Islamic financial units before 17 October 2024. Islamic finance or Islamic banking is a type of banking that is in accordance to the principles of sharia (Islamic law). Based on the regulation, those financial institutions that generate at least 50 percent of their capital through Islamic finance have to comply with the new rule.

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