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

  • Financial Update: Bank Indonesia Sees No Need to Alter Interest Rates

    At Bank Indonesia’s Board of Governors’ meeting, convened today (10/07), it was decided to keep the country’s benchmark interest rate (BI rate) at 7.50 percent, and the Lending Facility and Deposit Facility rates held at 7.50 percent and 5.75 percent, respectively. According to the central bank this policy is consistent with efforts to steer inflation back towards the target corridor of 4.5±1 percent in 2014 and 4.0±1 percent in 2015, as well as to reduce the current account deficit to a more sustainable level.

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  • What are the Best Performing Indonesian Stocks so Far in 2014?

    Regarding stock trading on the Indonesia Stock Exchange, investors who focused on property, banking and infrastructure stocks have made the highest profit so far in 2014. Although all sectoral indices that are contained within the benchmark stock index of Indonesia, known as the Jakarta Composite Index (abbreviated IHSG) have shown a good performance, the three aforementioned sectoral indices stand out as the country's top performers. Indonesia's IHSG has risen 16.14 percent between 1 January and 26 May 2014.

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  • Manufacturing in Indonesia (HSBC PMI) Accelerates in April 2014

    Indonesia’s HSBC Markit Purchasing Manager’s Index (PMI) showed a reading of 51.1 in April 2014, significantly up from 50.1 in the previous month, meaning that manufacturing activity in Indonesia has grown (a reading above 50.0 indicates expansion, while a reading below 50.0 indicates contraction). In fact, amid improved economic conditions as well as strong demand, manufacturing activity in Southeast Asia’s largest economy expanded at the fastest pace in 11 months.

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  • Banking Sector of Indonesia Shining Brightly but Some Difficulties Ahead

    The banking sector remains a key sector for growth of Indonesia's financial industry as well as the country's general economic expansion as the sector posted the highest profits worldwide. Prasetiantoko Augustine, economist at Bank Tabungan Negara (BTN), said that profitability in Indonesia's banking sector is not only highest in the ASEAN and Southeast Asian region but also worldwide. Bank Rakyat Indonesia posted the highest profit of Indonesian banks in 2013 (IDR 21 trillion), followed by Bank Mandiri (IDR 18 trillion) and BCA (IDR 14 trillion).

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  • Profit of Indonesian Banks Expected to Grow Double-Digit Again in 2014

    Moody's Investors Service, one of the big three global credit rating firms, predicts that profit in Indonesia's banking sector remains stable due to strong financial fundamentals. In its report "Indonesia Banking System Outlook", which discusses Indonesian banks' creditworthiness over the next 12 to 18 months, Moody's assesses that - despite an economic slowdown having reduced GDP growth to 5.78 percent in 2013 and puts some pressure on asset quality - high profitability and strong capital levels will continue into 2014.

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  • Regulation and Supervision on Banking Sector Transferred to the OJK

    Today (31/12), the central bank of Indonesia (Bank Indonesia) officially transfers its authority to regulate and supervise the banking sector to the Financial Services Authority (Otoritas Jasa Keuangan, abbreviated OJK). Muliaman D. Hadad, Chairman of the Board of the OJK, said that all functions, duties as well as powers of regulation and banking supervision, licensing, inspection, investigation and consumer protection have been transferred to the 35 (regional) offices of the OJK.

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  • Unable to Continue Rebound; Indonesia's Stock Index Falls 0.73%

    Indonesia's benchmark stock index (IHSG) was not able to continue its rebound. On Friday (15/11), the IHSG fell 0.73 percent to 4,335.45 points amid widespread profit taking. Foreign investors recorded net selling of IDR 193 billion (USD $16.9 million) on today's trading day. Moreover, investors are concerned about the impact of the higher interest rate of the central bank (7.50 percent), particularly on the property and banking sectors in the fourth quarter of 2013.

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  • Agreement Bank Indonesia and the Indonesian Financial Services Authority

    Today (18/10), the Governor of Bank Indonesia and the Chairman of the Indonesian Financial Services Authority (OJK) signed an agreement concerning “cooperation and coordination to support task implementation at Bank Indonesia and OJK”. The agreement forms a basis for expediting and optimising coordination between both organisations in terms of their function, task and authority in light of the upcoming transfer of the banking regulation and supervision function from Bank Indonesia to OJK on 31 December 2013.

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  • Bank Indonesia Amends LTV/FTV Ratio to Safeguard Financial Stability

    Bank Indonesia amended its regulation concerning the Loan To Value (LTV) and Financing To Value (FTV) ratio for property credit and property-backed consumer loans. The LTV/FTV ratio is the ratio between the value of credit/financing that can be allocated by a bank and the corresponding value of collateral in the form of property when the loan is allocated. Property is real property that includes houses, vertical housing (apartments, flats, condominiums and penthouses), home offices and home stores.

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  • Bank Indonesia Plans New Rule to Avert Possible Property Bubble

    In order to avert a potential bubble in Indonesia's property sector, Bank Indonesia (the central bank of Indonesia) is planning to further tighten its monetary policy in the sector. After having raised the minimum down payment requirement on housing loans to 30 percent for first home ownership (thus a loan-to-value ratio of 70 percent) in June 2012, Bank Indonesia now intends to prohibit credits for the purchase of a second, third (or more) house that has not been built yet (still in the preconstruction phase). This new rule is expected to be introduced this month.

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