Asiamoney best bank awards 2019: Indonesia
Best Domestic Bank: Bank Central Asia
Bank Central Asia, led by president director Jahja Setiaatmadja, has an enviable reputation in Indonesia. The publicly listed bank boasts strong financials and fundamentals that reflect consistency and stability – winning traits for the best domestic bank in the country.
The numbers are impressive. Both operating income and net profit for 2018 rose about 10% year on year to Rp63 trillion ($4.4 billion) and Rp25.9 trillion respectively. Assets increased about 10% as well, while current and savings accounts (Casa) climbed a respectable 8.9% last year. Return on assets rose marginally to 4% from 3.9%.
BCA is majority owned by the Hartono family, which built up its fortune from the cigarette business before moving into banking.
The bank wins not just for its positive numbers, but for achieving those results in such a tough environment. Indonesia had a difficult time in 2018 with the global interest rate hikes and rising oil prices. Increases in rates led to outflows of capital from the country, forcing BCA to respond.
For example, with tight liquidity in the banking industry and a high loan-to-deposit ratio, BCA maintained a strong liquidity position last year by focusing on its transaction banking franchise. In the face of rising rates, the bank hiked its time deposit rates and focused on prudent lending and risk management.
BCA has kept a close eye on digitalization too, using more resources to enhance its offerings — a feat that also makes it Asiamoney’s best digital bank for Indonesia. In 2018, 98% of all of BCA’s transaction services were carried out over the internet, mobile or at ATMs.
For staying ahead of the game and managing its operations shrewdly, BCA deserves kudos. What’s next on the agenda? In April, it announced the purchase of small lender Bank Royal Indonesia. Integrating its operations with BCA’s own will be an important step.
Best Bank for SMEs: OCBC NISP
OCBC NISP is the bank of choice for small and medium-sized enterprises in Indonesia.
Its popularity is revealed in its financials. In 2018, total income from SME banking in Indonesia rose 12%, while loan balances increased 20% to Rp18.8 trillion ($1.3 billion) from Rp15.7 trillion in 2017. Deposit balance jumped 32% while the current account balance grew 11%.
|Thomas Low, OCBC NISP
Consistency has been the bank’s mantra, given net interest income has grown around 20% each year since 2012.
Under Thomas Low, managing director in the retail banking department at OCBC NISP, the firm has set up a special division called EmB, or emerging business, focusing purely on SME lending.
The unit supports SMEs by providing working capital and secured commercial property loans of up to Rp25 billion. Last year, the bank beefed up its sales productivity by expanding the EmB sales network and cross-selling through other business segments.
OCBC NISP, in which Singapore’s OCBC holds an 85.1% stake, has also realized the importance of digital banking to appeal to SME customers. In September 2018, it set up a transformation team to digitalize banking offerings for customers and SME clients to help them reap the benefits of a digital economy.
To that end, OCBC NISP launched the ONe Mobile application, for instance, which allows individual business owners to see their business and personal cash flow in one platform.
The app seems to have hit the mark, proven by the 40% increase in transactions through ONe Mobile year on year in 2018, with fee income rising 46%.
OCBC NISP is moving in the right direction. It is investing in and using data analytics to better understand and serve SMEs, ensuring the success of its business model.
Best Corporate & Investment Bank: Mandiri Sekuritas
In terms of both quality and quantity, Mandiri Sekuritas’ corporate and investment banking business impresses. During the Asiamoney awards period, the securities house – which is a subsidiary of Bank Mandiri – ranked third for investment banking revenue in Indonesia, earning $11 million for a 5.5% market share, behind Standard Chartered in first and BNP Paribas in second place, according to Dealogic data.
|Silva Halim, Mandiri Sekuritas|
On the Indonesia debt capital markets bookrunner league table by volume, Mandiri Sekuritas came first with credits for $2.12 billion, working on 41 deals for an impressive 10.3% market share. In second place was Citi with credits of $1.8 billion and 8.9% of the market, according to Dealogic. Mandiri also led the way in loans, coming first with credits of about $1.8 billion for a 13.9% market share.
The firm performed spectacularly last year, with revenues of Rp540 billion ($40 million), its highest in 18 years, thanks to the efforts of Silva Halim, director of Mandiri Sekuritas, and her team as they aim for a dominant position across asset classes.
How has it done that? Bankers at Mandiri Sekuritas have focused on building a strong equity research and distribution team, expanding the fixed income business to beyond just plain vanilla bonds and turning their attention to having a solid and sustainable domestic investor base for distribution.
The firm has steadily made progress on the M&A front, having started the business just a couple of years ago. It has been working actively with boutique banks to offer M&A advisory services. Its presence is still small, but it hopes to win a bigger share of the pie over the next few years.
What is also notable is that alongside the long list of companies it has supported across DCM, ECM and loans, it has also tried to make Indonesia’s capital markets more sophisticated.
Mandiri Sekuritas brought the first corporate wakala bond to the market with Medco Power. It tried to introduce an Indonesian rupiah-denominated perpetual bond that unfortunately did not get much love from the country’s conservative investor base, and it is also trying to boost the issuance of project bonds, which again is a slow process as the buy side needs more education.
But rivals say its efforts at diversifying product offerings are being noticed, and that sooner rather than later, the firm will be able to break new ground for Indonesia’s capital markets. For its valiant efforts at taking the country’s market to a new level, Mandiri Sekuritas deserves recognition.
Best International Bank: Citi
Citi’s operation in Indonesia is envied by both domestic banks and other international lenders alike. And for good reason. The US firm is one of the few international banks in the southeast Asian country to cover corporate and investment, commercial and consumer banking.
|Batara Sianturi, Citi Indonesia|
Its franchise is doing well. Citi Indonesia reported net income of Rp838 billion ($59 million) in the first quarter of 2019, up an impressive 44% year on year. This was thanks to a boost in net interest income and net trading income, to Rp1.1 trillion and Rp313 billion respectively. Return on equity rose to 20.8% in the first quarter from 14.3% in the same period of 2018, while return on assets rose to 5.3% from just under 4%.
Across CIB, Citi offers a full suite of services and has worked with a host of companies across equity and debt capital markets, as well as loan syndications. Its client base includes names such as Link Net, Saka Energi Indonesia and Bank Rakyat Indonesia, as well as the Indonesian sovereign, XL Axiata and state-owned Perusahaan Listrik Negara.
Citi Indonesia’s global subsidiaries group has also trumped its rivals when it comes to working with multinational corporations. The bank’s MNC segment reported double-digit asset growth year on year in 2018, boasting clients such as Home Credit Indonesia and Lestari Banten Energi.
Under chief executive Batara Sianturi, Citi Indonesia has made big efforts to encourage investment into the country by holding roadshows in China, Taiwan and Japan, for example. As of May, flows in Citi’s Taiwan-Indonesia corridor were up 83% year on year, while in the Japan-Indonesia corridor they were 27% higher.
Citi’s commercial banking capabilities remain unrivalled, as does its treasury and trade solutions, as well as markets and services businesses. For the latter, for instance, transaction volumes jumped 15% over the last year.
Best Digital Bank: Bank Central Asia
In the last year, Bank Central Asia has given its digital ambitions a new lease of life, making it Asiamoney’s best digital bank in Indonesia in 2019. The bank has positioned itself for growth by adopting more digital technology in its operations, particularly in transaction banking.
Some of the benefits came in the form of a spike in digital transactions conducted through internet and mobile channels, as well as ATMs, which now account for 98% of BCA’s total transaction volume.
BCA, led by president director Jahja Setiaatmadja, has not relied simply on its own, internal advances to find success, it has also started to tie up with financial technology and e-commerce companies to boost operations, including promoting a cashless society.
Last year, it launched a peer-to-peer transfer feature using QR code technology. It started the OneKlik service, a payment feature in online merchants that increases the speed of payments, and launched a virtual assistant chat banking service for its customers.
That’s not all. BCA’s subsidiary Central Capital Ventura, established in 2017, invests in startup fintech companies. The investments are aimed at supporting BCA’s services. Last year, CCV made 13 investments, with its investment having increased four times versus 2017. Its total assets hit Rp205 billion ($14.4 million) in 2018.
Electronic wallets and cardless cash withdrawal services are part of BCA’s offerings to retail customers. The traction in 2018 and early 2019 was the result of plenty of hard work behind the scenes. Since 2017, for instance, the bank has been developing its digital innovation solutions unit, a sub-unit of the IT department, which focuses on technological innovations in line with customers’ expectations and wants.
Best Private Bank: Credit Suisse
When a bank says that 70% of the billionaires on the Forbes Indonesia list are customers, you know its services are top notch. That’s the kind of reputation Credit Suisse, winner of best private bank 2019, has with its clients.
|Benjamin Cavalli, Credit Suisse|
That roster of high-profile clients means Credit Suisse has a share of wallet of more than 10% in the country. And under Benjamin Cavalli, Singapore chief executive and head of private banking for southeast Asia, the bank’s business has gone from strength to strength.
Assets under management in Indonesia increased 13% in the first quarter of 2019 from a year ago, while net new assets increased a whopping 546% year on year as of May. Net revenues showed a 5% compound annual growth rate over a four-year period.
Credit Suisse’s enviable model of investment banking-private banking collaboration works in Indonesia too. Repeat clients have been key here, with the bank working on numerous deals for companies such as the Rajawali Group, Medco Energi Internasional, Gajah Tunggal and Sinarmas, as well as the Lippo Group, CT Corp and Bumi Resources.
The bank also claims to have relationships with around 60% of ultra-high net-worth Indonesian family businesses listed on Globe Asia’s list of Jakarta 150.
Credit Suisse’s private bank has a niche in Indonesia as competition for the kind of clients it works with is limited. And the fact that it is expanding slowly but steadily outside the capital of Jakarta could give a further lift to its business. The bank’s firm grip in the private banking industry looks sustainable.
Best Bank for CSR: Bank Rakyat Indonesia
Bank Rakyat Indonesia takes its commitment to corporate and social responsibility seriously.
Last year, it was one of eight banks involved in setting up the Indonesian sustainable finance initiative under the Financial Services Authority. As chair of the initiative, BRI promotes strategic programmes, builds partnerships and initiates projects to establish a green business model.
|Suprajarto Suprajarto, Bank BRI
Promoting financial inclusion and literacy is an important part of the bank’s work. It emphasizes cashless transactions by developing e-channel networks to increase awareness of non-cash trades. It also offers branchless banking service BRILink, operated directly by customers. At the end of 2018, BRI had 401,550 BRILink agents, or 5.7% more than its target of 380,000, ensuring that it was able to boost financial inclusion.
Led by chief executive Suprajarto Suprajarto, state-owned BRI supports government programmes that focus on improving community welfare through loans and grants.
In addition to these, the bank provides financing to the green sector and only banks companies that have an environmental impact analysis document and a minimum blue rating under the ministry of environment and forestry’s environmental programme.
BRI also funds private companies that produce new and renewable energy, such as solar power plants and hydroelectric power plants. It lent Rp2.8 trillion ($197 million) in funding to the renewable energy sector last year — a whopping 81% more than in 2017.
What’s next on the bank’s agenda? In November 2018, BRI put together a sustainable finance action plan, which encompasses short- and long-term goals for the next five years. In 2019, the bank is mainly focusing on issuing sustainability bonds, providing sustainable finance training and education to employees and customers and reducing plastic consumption.