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Indonesia Banking Industry Report - 2016

  • February 2016
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 36 pages

This report profiles Indonesia's banking industry, discussing market trends through 2015 and outlook for 2016. The report also highlights leading players in the sector including PT Bank Mandiri (Persero) Tbk (BMRI), PT Bank Rakyat Indonesia (Persero) Tbk (BRI) and PT Bank CIMB Niaga Tbk (BCN).



Indonesian banks were the most profitable banks amongst the top 20 global economies in terms of return on assets as of 2013. High credit growth coupled with high net interest margins enabled the country's commercial banks to reap enormous profits. However, the good times witnessed by the Indonesian banking sector in the last few years finally came to a halt in 2013-14. Trade deficit, spike in consumer price inflation and announcement of the U.S. Federal reserve stimulus tapering-off, combined to create a hostile environment for the country's banking sector. The trouble started with massive depreciation in the value of IDR, which eventually led to a huge surge in consumer price inflation. As a result, Bank Indonesia had to raise benchmark policy rates by 200bps between May 2013 and November 2014. By January 2015, the benchmark rate stood at 7.75%, but decreased to 7.3% a year later.



The banks have started feeling the heat. The cost of sourcing funds has risen and rate sensitive sectors are beginning to report increased non-performing loans (NPLs). As a result, banks have become more cautious in disbursing credit which has negatively affected the phenomenal credit growth in the last few years. Consequently, profit growth of banks has also slowed down. Nevertheless, local banks have continued to maintain strong capital levels.



Toward the end of 2015, the economy and banking sector exhibited signs of improvements. However, the risk for global economic slowdown still exists in 2016, and banks may continue to remain cautious in credit disbursements, especially for industries that are still affected by the currency depreciation.



Key Points:



o Commercial banks led the country's banking sector in terms of asset size as of August 2015, accounting for 95% of total assets. Rural banks only accounted for 1.5% of total assets. Within the commercial banking industry, state owned banks (SOB) accounted for 36% of total assets.



o The asset base of commercial banks in Indonesia grew at a CAGR of 16.2% during 2006-14.



o Total IDR deposits of commercial banks grew at a CAGR of 15% during 2006-14. Meanwhile, foreign exchange deposits grew at a CAGR of 17% during the same period. In August 2015, IDR deposits grew by 13% y/y while foreign exchange deposits grew by 25% y/y.



o Total credit disbursed by commercial banks grew at a CAGR of 21% y/y during 2006-14. In August 2015, it grew by only 11% y/y, much less than its historic growth rate. Lower economic growth led to a lower credit growth in 2014 and 2015 compared to previous years.

Table Of Contents

Indonesia Banking Industry Report - 2016
1. Industry Profile

1.1 Sector overview

1.2 Sector size

1.2.1 Assets

1.2.2 Liabilities

1.3 Sector performance indicators

1.3.1 Interest rates

1.3.2 Liquidity position of banks

1.3.3 Capital adequacy ratio (CAR)

1.3.4 Loan to deposit ratio (LDR)

1.3.5 Net interest margin (NIM)

1.3.6 Operating ratio

1.3.7 Return on assets (ROA)

1.3.8 Non performing loans (NPL)



2. Market Trends and Outlook

2.1 Key economic indicators-Indonesia

2.2 Environmental scanning

2.3 Competitive landscape

2.4 Islamic banking

2.5 Market outlook



3. Leading Players and Comparative Matrix

3.1 Leading players

3.1.1 PT Bank Mandiri (Persero) Tbk (BMRI)

3.1.2 PT Bank Rakyat Indonesia (Persero) Tbk (BRI)

3.1.3 PT Bank CIMB Niaga Tbk (BCN)

3.2 Comparative matrix

3.3 SWOT analysis



4. Tables and Charts

Table 1: Types of banking institutions in Indonesia

Table 2: Major Banks of Indonesia

Table 3: JIBOR rates in Indonesia

Table 4: Average deposit rates offered by commercial banks of Indonesia

Table 5: Average ROA of listed banks of major economies

Table 6: Key financial indicators of the leading players



Chart 1: Office network of Indonesian banking institutions

Chart 2: Segment breakup of commercial banks in terms of asset size

Chart 3: Number of commercial banks by type

Chart 4: Total assets of commercial banks in Indonesia

Chart 5: Asset profile of commercial banks of Indonesia

Chart 6: Total credit disbursed by commercial banks in Indonesia

Chart 7: Distribution of third party credit by sector and purpose

Chart 8: Y/Y Bank credit growth in different sectors of economy

Chart 9: Liability profile of commercial banks of Indonesia

Chart 10: Total deposits of commercial banks

Chart 11: Y/Y Bank deposit growth by different segments

Chart 12: BI rate in Indonesia

Chart 13: Liquidity assets ratio of banks in Indonesia

Chart 14: Capital adequacy ratio of banks in Indonesia

Chart 15: Loan to deposit ratio of banks in Indonesia

Chart 16: Net interest margin of commercial banks in Indonesia

Chart 17: Operating ratio of commercial banks in Indonesia

Chart 18: Return on assets ratio of commercial banks in Indonesia

Chart 19: NPL ratio of commercial banks in Indonesia

Chart 20: Distribution of NPL by sector and purpose

Chart 21: NPL ratio in different sectors of economy

Chart 22: Y/Y growth in NPL in different sectors of economy

Chart 23: Quarterly GDP growth rate-Indonesia

Chart 24: Trade balance of Indonesia

Chart 25: Average monthly USD to IDR exchange rate

Chart 26: International reserves-Year end

Chart 27: Government budget deficit

Chart 28: CPI Inflation-Indonesia

Chart 29: Position of People's Representative Council after 2014 elections

Chart 30: GNI per capita, Atlas method

Chart 31: Indonesia's top banks in terms of asset size

Chart 32: Total assets of Islamic banks in Indonesia

Chart 33: Distribution of Islamic banking funds in Indonesia

Chart 34: Loans disbursed by BMRI Annual

Chart 35: Profitability of BMRI-Annual

Chart 36: NPL ratios of BMRI

Chart 37: Loans disbursed by BRI-Annual

Chart 38: Profitability of BRI-Annual

Chart 39: NPL ratios of BRI

Chart 40: Loans disbursed by BCN-Annual

Chart 41: Profitability of BCN-Annual

Chart 42: Gross NPL ratio of BCN

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