Asiamoney best bank awards 2018: Indonesia
Best domestic bank: Bank Central Asia
When the Asian financial crisis swept through the region two decades ago, Bank Central Asia was on its knees, a victim of over-reach and poor management.
Today, BCA is Asiamoney’s best overall bank in Indonesia for 2018. And here’s why: it makes more from less.
For the first half of this year, BCA reported net profit of Rp11.4 trillion ($780 million), up 8.4%. True, that’s short of the $843 million earned by Bank Mandiri, which, like BCA, is the other great phoenix to rise from the ruins of the financial crisis and which is BCA’s perennial rival for biggest bank status in Indonesia.
But private sector BCA has made its money more efficiently than state-owned Mandiri. BCA has about 26,000 employees, whereas Mandiri’s headcount is 47% higher at 38,300. BCA has only 1,235 branches, just under half Mandiri’s national branch presence of 2,631. Put simply, BCA is a better-managed and leaner bank, and that’s why it gets Asiamoney’s gong, 20 years after it was on its knees.
Next on chief executive Jahja Setiaatmadja’s agenda? Acquisitions. With loan growth chugging along nicely – BCA’s mortgage lending almost doubled in 2017 – plus interest rates moving up and costs kept in check alongside BCA’s rising digitalization, Setiaatmadja has recently flagged to the market that he wants to buy a bank in a sector that is ripe for consolidation.
Best corporate and investment bank: Credit Suisse
In Jakarta, bankers can be certain of three things: 1) long delays thanks to chronic traffic gridlock known as macet; 2) their meetings with state officials are cancelled or postponed several times and at a moment’s notice or none at all; and 3) when there’s a big deal brewing, Credit Suisse won’t be far away from it.
Or, more likely, running it. For yet another year, Credit Suisse has dominated all investment banking categories in Indonesia. In M&A, the bank was sole financial adviser to Singapore’s Fullerton Financial Holdings on the sale of its 74% stake in Bank Danamon to Japan’s MUFG for $5.9 billion, in what was southeast Asia’s largest banking sector deal. In April, Credit Suisse was joint coordinator and bookrunner in the $143 million IPO of hospital operator Medikaloka Hermina, despite a soft equity market. In terms of debt offerings, the bank was joint global coordinator for a $500 million international bond for resources house PT Medco Energi Internasional in January.
All-told, the Credit Suisse team generated $20 million in fee income for the year, according to Dealogic, to top the table for share of wallet in Indonesia, with daylight between CS and Citi in second place.
Best international bank: MUFG Bank
In a category that was dominated by the likes of Citibank, Standard Chartered and HSBC in Indonesia, there’s a new face in town. It is Japanese and it is big: the Mitsubishi UFJ Financial Group, Japan’s biggest bank and the world’s fifth largest.
MUFG first arrived at Danamon in December, when it replaced Singapore’s sovereign Temasek’s 15-year-long investment in Indonesia’s sixth-largest bank. MUFG has already been making its presence felt by ratcheting up activity in Indonesia’s flourishing SME sector, car financing and home mortgages in a bid to tap into the country’s 250-million-strong, fast-expanding middle class.
Under MUFG, Danamon has also moved to merge with the small Bank Nusantara Parahyangan. MUFG has also taken stakes in Vietinbank of Vietnam, Thailand’s Bank of Ayudhya and Security Bank of the Philippines, while Japan’s second-largest bank, Sumitomo Mitsui, has followed MUFG by also moving to increase its exposure to Indonesia, buying into medium-sized lender BTPN.
And the rush to get set in Indonesia hasn’t just been Japanese. South Korea’s Shinhan Bank recently bid for Bank Metro Ekspres, while China’s Construction Bank bought the small Bank Windu in 2016. Expect more of the same.
Best private bank: Credit Suisse
Credit Suisse’s continued domination of the investment banking sector in Indonesia has clearly helped Credit Suisse in the private banking space. The bank claims that 70% of Indonesia’s billionaires bank with it: with Credit Suisse leveraging its domination on the corporate side into private banking.
Credit Suisse says it has 90 staff dedicated to serving Indonesian clients, and claims to have achieved a sustained 5% compound annual growth on managed assets since 2014. This year has seen the bank, under head of private banking Johanes Oeni, expand its footprint beyond the capital to emerging regional wealth centres in Surabaya, Bandung, Semarang and Medan.
Best digital bank: Bank Danamon
During 2017 and 2018, Bank Danamon transformed what had merely been a common or garden mobile banking app into a new digital banking channel, as its D-Mobile morphed into D-Bank.
Apart from now-commonplace internet banking, customers can seamlessly work between accounts, video-chat with customer service, pay their taxes, social security or other bills, and even summon the providers of Indonesia’s hot new transport service – called Go-Jek, a variation on the informal ojek motorbike pillion passenger service – without having to go anywhere near a physical branch.
Danamon, for whom Michellina Triwardhany is vice-president director, has added capabilities in foreign exchange transactions as well as mortgage application and tracking, reflecting Indonesia’s emerging fervour for home ownership. Danamon’s D-Wallet has also teamed up with Doku, one of Indonesia’s largest payment gateways, to pioneer an electronic wallet for cashless use at retail outlets and to move funds between accounts and account-holders.
Danamon hopes its new mobile platform will also bring more of Indonesia’s unbanked population, who tend to have phones, into the financial mainstream. The D-Financial app has been finessed to support the growing SME sector. What’s next? With Japan’s MUFG Bank as its aggressive new large shareholder, Danamon says it is now targeting Indonesia’s big corporates with D-Bank.
Best bank for SMEs: OCBC NISP
Fun fact: the NISP in the name of one of Indonesia’s oldest banks, OCBC NISP, is a rare holdover from the bank’s beginnings at a time when Indonesia was a Dutch colony. The name Nederlandsch Indische Spaar en Deposito Bank, or Dutch (East) Indies Savings and Deposit Bank, might be a window into history, but as booming Indonesia marks its 73rd year of independence this year, it is with another acronym – SME – that this venerable Singapore-owned bank is making a modern impact.
Two years after chief executive Parwati Surjaudaja, the granddaughter of NISP’s founder, targeted big city-centric small and medium-sized enterprises with a digitized ‘sales dashboard’, business has taken off. In the year to May, total SME income has jumped 18.4% as loan balances have climbed 22.6%. Net interest income from SME banking is up about 13%.
OCBC NISP says its sales dashboard initiative, which allows its bankers to act more like relationship managers, contributed to a 34% increase in new loan bookings from existing customers, now making up 32% of total new loan booking growth.
That’s not bad for an old bank that has managed to cement a genuine partnership between its foreign owners of 21 years – Singapore’s OCBC – and the ethnic Chinese, Indonesian family that founded it in 1941.
Best bank for CSR: Bank BRI
A state-owned enterprise, and one of Indonesia’s oldest banks, Bank Rakyat Indonesia (or People’s Bank of Indonesia) is setting a new standard for corporate social responsibility in the country with its partnership and community development programme under chief executive Suprajarto Suprajarto, particularly for its public sector.
With its ‘Proud to be Indonesian’ tagline, BRI has sunk roughly $10 million back into the community in the period 2017/18, providing much-needed natural disaster relief, educational assistance and health improvements.
BRI’s Indonesia Lestari programme has focused on conservation, notably mangroves and restoring wildlife habitats, while its Indonesia Sejahtera initiative aims to eradicate poverty. Throughout 2017, BRI’s total budget for the latter was Rp32.09 billion ($2.2 million).
As a state-owned enterprise, BRI says it is duty-bound “to assist the economic empowerment of the community.”
Through its partnership programme, the bank is making thousands of low-interest loans and disbursements designed to encourage and generate small businesses by helping with working capital and fixed assets. In 2017, BRI allocated around $15 million in partnership loans to more than 3,000 smallholdings in agriculture, fishery and animal husbandry.