Monday, 2 December 2013

TO EVALUATE PERFORMANCE OF THE BANKING SECTOR



The National banking industry still had the strength to withstand various risks of macro economy like economic slowdown, increase of bank interest and Rupiah depreciation.

The healthy condition of banks was evident in the state of liquidity, credit, or capital. National CAR was still at 18.02%, way above the minimum standard of 8%; whilkst the ratio of NPL remained low at 1.94%; in some banks even declining.

By August 2013 the national banking industry booked net profit of Rp70.74 trillion, growing by 18.45% [yoy] compared to same period last year at Rp59.72 trillion.

The profit company bank group grew in the banking sector to reach 19.6% [yoy] from Rp25.56 trillion to become Rp30.49 trillion. The regional development bank [BPD] growing from Rp6.03 trillion to become Rp7.37 trillion.

Banks of the National Private Bank category [BUSN] non forex and forex posted profit growth respectively 16.65% [from Rp22.45 trillion to Rp26.19 trillion] and 25.53% [from Rp1.75 trillion to become Rp2.20 trillion] . Meanwhile banks of the mixed category grew by 25.84% from Rp2.28 trillion to become Rp2.87 trillion] and foreign banks growing by Rp3.40 trillion to become Rp3.82 trillion.

On the other hand, growth of banks in August 2013 posted slowdown at 22.18% [yoy] down against July at 22.31%. This slowdown was among others influenced by economic slowdown and increase of bank interest. The result: growth of consumptive credit and investment credit were posted to slowdown on August 2013 compared to the month before.

Investment credit of national banks grew by 32.53% [y o y] to become Rp729.41 trillion per August 2013 compared to same period last year at Rp550.38 trillion. The highest investment growth was posted by company bank at 60.44% [yoy] to become Rp251.43 trillion against the same period of last year at Rp156.71 trillion. Furthermore followed up by mixed bank and foreign bank at 31.62% [yoy] to become Rp90.36 trillion against same period the previous year at Rp68.66 trillion.

Meanwhile private banks [forex and non forex] posted investment growth of 19.17% [yoy] to become Rp359.08 trillion against the previous Rp301.33 trillion. Meanwhile the Regional Development Bank Group [BPD] posted investment credit growth at 20.47% [y o y] to become Rp28.53 trillion, against the previous Rp23.69 trillion.

Growth of Consumption credit by August 2013 came to 16.87% [yoy] from Rp749.86 trillion to Rp876.39 trillion. The growth was noted to slowdown compared to July 2013 at 20.03% y o y. Growth of Labor Capital Credit increased by 20.75% [yoy] from Rp120,41 trillion to become Rp1,461.60 trillion, compared to previous month at 18.70%.

Sector wise, slowdown in credit growth was happening in the business sector, electricity, gas and clean water, while credit growth in transportation sector and trading were still high.

By August 2013, fix deposit interest rose by 29 bps, while credit interest tend to be stable. Credit rate for working capital dropped by 3 bps to become 11.63%, investment credit rose by 8 bps to become 11.3% and credit interest for consumption dropped by 1 bps to become 13.05.

Net interest Margin of the banking industry in August 2013 settled at 5.46% compared to July 2013 which was also experienced by company bank group at the level of 5.93%. Meanwhile NIM of company bank group rose from 5.86% to 5.93%. Other performances of the banking sector like ROA inched up by 3.03% from 3.00% [yoy] in July 2013. Meanwhile LDR was posted to increase from 88.68% in July 2013 to become 88.88%.

Sector wise, increase of credit in August 2013 was influenced by increase in trading sector at 32.49% [yoy] to become Rp605.35 trillion and the processing industry sector increased to the level of 26.27% [yoy] to become Rp500.98 trillion against previous month 24.91%.

In August 2, 2013 growth of Third Party Fund [DPK] increased by 15.29% [yoy] or reaching Rp3,440.21, higher than June 2013 was driven by increasing giro growth and fixed deposit 14.77% respectively [yoy] to become 15.35% [yoy] against the month before. Meanwhile saving account grew by 13.14% [yoy] lower than June 2013 at 15.55% [yoy].

Hence market share of fixed deposit in DPK became 44.16% while market share of savings account and giro was 31.9% and 23.92% respectively; while CASA in August 2013 dropped to 55.84% compared to previous month at 56.28%.

Generally speaking the banking sector as one of the main pillars of Indonesia’s financing sector had been able to make its mark amidst inflation pressures and bank interest, and global economic uncertainty. Good performance was maintained through August-September 2013.

To observe financial performance of quarter III-2013 as published by high strata bank, the fundamental strength of banks was cearly visible as evident in the indicators.

First tier banks still managed to grow by 2 digits in quarter III-2013 compared to same period the previous year. Apparently credit of Third Party Fund [DPK] increased between 20%-30% while asset grew fast. As the only bank in the Asean top ten list, Bank Mandiri posted asset that exceeded Rp700 trillion.

Big banks were also able to enjoy NIM above 5% some even 8%-9%. The good news was that net NPL was still controlled amidst increasing bank rates, on the average below 1%.

BI projected credit growth dropped from around 20% this year to be around 15%-16% next year. The consequences was that the projection of net profit tend to decline expect fee based income which was jacked up to compensate downturn in net interest income. Meanwhile growth of third party fund was posted at 14% with tighter liquidity which stimulated rush for public fund. 

Business News - November 8, 2013

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