APPRAISAL FOR INDONESIA’S BANKING SECTOR

The USA and some European states might be tormented by crisis which made their banks black and blue. Some banks had to be rescued through recapi­talization program so the economy of that zone could survive from debt and fiscal crisis. On the other hand in Asia the banking sector was able to show impres­sive performance not excluding Indonesia.

It seemed reasonable that the international rating agency, Fitch Ratings stated big banks in In­donesia were highly resistant to pressures after un­dergoing stress test, especially those who had good absorbing qualities and support of big enterprises. Therefore, Outlook Rating for most banks at home were relatively stable, even showing high credit growth over the past 3 years, reducing risk of as­set quality in the local banking sector.

Most of the banks in Indonesia had relatively high superior margin and profitability against other banking system in the developing countries, serving as strong safety net against the risk of potential recession. Based on stress test by Fitch, nine main creditors in Indonesia were reckoned to suffer loss of 3.8% from their landings, but managed to cover up by pre-profits equal to 5.2% of credit.

In a normal economic cycle over the past five years, losses from credit ranged from 1% and 2% of lending, whilst pre-condition was equal to 6% - 7% of credit. Stress test by Fitch disclosed that big domes­tic banks was showing high resistance or vulnerability which on the whole was concluded in their Viability Rating (VR).

By systemic it was most important for Indo­nesian big banks to be able to overcome pressures from loss with their own stable basic income. Fitch had shown that outcome of the stress test did not represent all the banks in Indonesia, which was pre­dictably still profitable amidst stable economic growth in Indonesia.

Fitch’s estimate was that in terms of GDP Indonesia would grow by at least 6% by 2013. Be­sides, stress test brought some benefit as preven­tive measures for banks in overcoming down turn of asset's quality and recovery of support as well as cost savings in times of under-pressure scenario.

Nine leading banks in Indonesia command­ing over 65% of market share of banking credit had passed the stress test by Fitch ratings Indonesia. Ac­cording to analyst of Fitch, the banks were able to absorb operational risk caused by high credit growth and global uncertainty.

The nine banks were PT Bank Mandiri Tbk (BMRI), PT Bank Rakyat Indonesia Tbk (BBRI), PT Bank Central Asia Tbk (BBCA), PT BNI Tbk (BBNI), PT Bank CIMB Niaga Tbk, PT Bank Danamon Indonesia Tbk (BDMN), PT Bank International Indonesia Tbk (BNII), PT Bank Pan Indonesia Tbk (PNBN), and PT Bank OCBC NISP Tbk (NISP).

Based on BI's data per December 2012, the banks by size were in the following order: Bank Mandiri Rp 493 trillion, BCA Rp 380 trillion, BN1 Rp 289 trillion, CIMB Niaga Rp 164 trillion and Bank Danamon Rp127 trillion. Meanwhile other big banks were Pan Indonesia Bank (PANIN), Bank Permata, Bank Internasional Indonesia (BII), Citibank, and Bank Tabungan Negara.

Analysis outcome of Fitch was reflected in the financial performance of one of Indonesia's high strata bank, i.e. PT Bank Rakyat Indonesia (Persero) Tbk or BRI. This bank through 2012 was able to reap net profit of Rp 18.52 trillion or growing by 22.79% against end of 2011 at Rp 15.08 trillion.

The profit making was mostly thanks to re­covery rate of Non Performing Loan, in addition to in­terest- based income and fee-based income. Besides, profit was also made by fee-based income which rose by 47.8% of Rp 5.5 trillion to become Rp 8.2 trillion, with cost of fund which dropped from 4% to 3%. Net interest income of Rp 35.8 trillion, an increase of 4.73 % from Rp 33.8 trillion, up by 4.37% from Rp 33.8 trillion. Bank was also able to increase recovery rate by Rp2.2 trillion or around 65%. Normally recov­ery rate was around 325%.

In terms of credit pipelining, there was re­corded growth of 22,8% of Rp 283.58 trillion by end of 2011 to become Rp 348.23 trillion by end of 2012. Meanwhile third party fund (DPK) rose by Rp 372.15 trillion to become Rp 436.10 trillion. Hence total company's asset came to Rp 535.21 trillion by end of 2012, up by 17.23% to become Rp 436.10 trillion by end of 2011.

Meanwhile Capital Adequacy ratio (CAR) of 2012 was known as 16.95%, NPL gross dropped from 2.3% to become 1 .78% Meanwhile operational cost against BOPO was 59.93%, cost to efficiency ratio (CER) 43.11%, return on asset (ROA) 5.15% and ratio of LDR was 79.85%.

The question is: would the outstanding per­formance of the banking sector in 2012 continue this year? In view of the driving forces of performance, looks like last year's achievements would continue this year. Support of the sound national fundamental economy, which was strong and stable, was the main supporting factor.

Support from external factor was not sim­ply ignorable. An example was signal of economic recovery from the USA which was beginning to show with attained economic growth of 2012 at 2.2%. America's macro economic data was also improving. Meanwhile in Europe the economic healing program through Austerity Program was showing positive sign.

Evidently Germany's economic growth of last year remained positive at 0.7% after predicted contraction the previous year. If this strongest economic power of Europe was able.



Business News - February 06,2013