By observing the performance development of some high strata banks in
Indonesia, it was easy to see opportunities and challenges in financing the
micro, small and medium business [UMKM] in the coming years. For reference,
performance record of bank mandiri, CIMB niaga and bank Central Asia, who had
announced their financial performance, of quarter l 2013, could be seen.
Bank Mandiri and CIMB had managed to make big profit, although their
credit was still below the average industry growth. As per March 2013, Bank
Mandiri made net profit of Rp4.3 trillion or growing by 26.4% compared to
previous year but credit only grew by 19.7% to become Rp391.6 trillion.
Profit of CIMB Niaga came to Rp10.05 trillion or growing by 12% and
credit pipelining increased by 13% to become Rp129.83 trillion or soaring up by
25.5% compared to previous year. Meanwhile BCA credit increased by 26.7% to
become Rp209.2 trillion.
One of the successes of Bank Mandiri and BCA in making profit was in
increasing net interest Margin [NIM]. Mandiri scored increase of NIM from 5.03%
to 5.38%; meanwhile BCA NIM increased from 5.2% to 5.9%. This NIM increase was
because banks aggressively channeled consumption credit and UMKM which set high
margins.
AT Bank Mandiri, commercial credit grew by 23,6%, consumer credit 21.1%
while micro business grew by 58% and business banking grew by 24.5% but corporate
credit inched up by only 10% to become Rp125 trillion.
In BCA, consumer’s credit ran fastest, growing by 34.4% to become
Rp71.7% the sustainer was mortgage [KPR] which soared up by 43.1%. Furthermore
commercial credit and UMKM which grew by 30.2% to become Rp105.7 trillion.
Cooperative credit of BCA grew by 17.2% to become Rp105.7 trillion.
The same picture was seen in CIMB Niaga Bank. This bank, whose majority
share was owned by Malaysian investors posted highest growth in personal loan
and micro credit which grew by 75% and 56% respectively. Credit to the
commercial sector contributed highest in credit pipelining of CIMB Niaga, i.e.
40% or worth Rp59.60 trillion. Next was consumer’s credit amounting to Rp45.09
or contributing 31% of total credit, and corporate amounting to Rp42.37
trillion.
According to the management of the said banks, the still unstable global
economy and soaring inflation caused banks to be more prudent about extending
credit. In this case reasonably high NIM enable the to maintain profit growth.
Each year NIM growth remained protected. In general the banks set target of NIM
attainment of 5.5% - 6.0% this year.
On notable point was financial performance of quarter l 2013 of PT Bank
Rakyat Indonesia Tbk. [BBRI] which managed to book profit of Rp5.01 trillion;
the profit was an increase of 18.6% of the same period last year at Rp.4.22
trillion. Credit grew high, Net Interest Income [NII] increased well, fee based
income grew normally and cost of fund dropped significantly. This was a
positive a development after attainment of BRI net profit.
The profit was among others contributed by credit growth which rose by
27%. In quarter l of 2012 last the credit extended came to Rp283.1 trillion.
Over the sane period this year is amount of credit increased to Rp361.2
trillion. NII was noted to increase by 17, 8% from Rp8.2 trillion to Rp9.7
trillion. Furthermore also by 24.5% from Rp832 billion to become Rp1.03
trillion
Fee based income grew quite notably. Cost of fund dropped from 3.68% by
end of March 2012. On year later, March 2013 it came to 3.54%. Third party fund
collected in this quarter, i.e. Rp403.1 trillion broken down as fixed deposit
Rp173 trillion, savings Rp173 trillion and giro fund Rp58 trillion. However,
NIM inched down from 8.36% to 8.19% due to heightened competition among banks.
All in all, BRI was still maintaining their reputation as a bank
specializing in micro-credit. In the first quarter of this year the credit for
micro industry grew by 22.2% from Rp91.8 trillion in the same period of last
year to Rp111.2 trillion this year. At that growth level, the micro segment was
his greatest component in BRI’s credit portfolio.
The micro-credit constituted 31% of BRI’s total credit amounting to
Rp361 trillion. In bank’s business plan [RBB], the composition of micro credit
was regulated to constitute 32%-34% of total credit portfolio. BRI would still
focus credit on the UMKM segment. They were even sure that growth of the UMKM
segment could exceed BRI’s credit capacity.
How prospective in the credit-for micro in the future? In consequence of
BI’s policy on multiple licensing which substantially relate core capital and
bank’s business activities including network expansion and small business
[UMKM] financing, word was out that banks which had been focusing business on
corporate credit would be much trouble by that new regulation.
The new regulation had it that it was mandatory of banks to allocate at
least 20% of total credit. An obligation as such would be hard to fulfill
directly by banks who were accustomed to extending credit to corporations. The
banks did not have sound infrastructure and reliable human resources. Somehow
since it was compulsory they could do nothing but to come to terms with BI.
The commitment had been written in Bank’s Business Plan [RBB] which was
reported to BI. In this RBB which was approved by BI most of the corporate
banks allocated 5%- 10% of their credit for small business. To executive credit
pipelining, bank had two options: [1] through credit channeling or [2]
proceeding to people’s Credit Bank [BPR] and credit channeling for UMKM for
exporters of non mineral product like handicrafts.
Foreign Bank’s Branch Office who had difficulty in channeling credit for
small business could substitute the task with trade financing provided that the
financed company was still small and non mineral.
In the multi-licensing regulation BI allowed convenience for banks who
had no capability to pipeline credit for UMKM. The condition was: to fulfill
UMKM credit portion of total credit at least by 2018. BI would also extend
technical aid in the form of training for banks which had no knowledge of
channeling credit to UMKM.
The UMKM category definition by BI referred to law no 20 year 2008. In
that classification a micro business was categorized as possessing net wealth
of Rp50 million at the most, not including land and business building including
traded commodities. Small business possessed wealth of Rp500 million with sales
amounting to Rp300 million to Rp2.5 billion. Medium Business possessing wealth
Rp500 million–Rp10 billion with sales of Rp2.5 billion–Rp50 billion.
Soon or late banks must prepare a special strategy in order to fulfill
BI’s equipments. With better financing literacy of Indonesian businesspeople,
it was projected that banking-for-micro business inclosing program encouraged
by the government together with Bank Indonesia, the Indonesia people all over
the country would be financially literate.
Market penetration to the UMKM segment including micro time after time
in the table hereunder confirmed that the banking sector now cared more about
the UMKM segment.
Soon market penetration of banking-for-micro would not only be
concentrated in the regions but also in the cities as there were concentration
of law class people who were the right target of micro-financing. The
consequence was that banks must aggressively expand operational reach. The
phenomenon of branchless banking was getting in style as more and more banks
were penetrating into the regions.
In terms of the middle class, Indonesia was in fact a huge market
potential for banks in which to identify market for micro banking. It was
noteworthy that the micro market was not only aimed at by medium scale and
small banks but also big banks.
In terms of risk management, especially liquidity risk management, fund
raising of the micro segment could serve as safety net in time of crisis.
Generally speaking money rising in the micro segment were relatively stable
whatever the condition.
Meanwhile in terms of financing, credit extending to the micro segment
could be safety valve because generally micro businesspeople were more
hardboiled. In time of crisis, they would not be affected too much so they were
still able to fulfill obligation to bank. (SS)
Business News - May 03,2013
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