This year we acknowledge the transformation under way at Bank BTN, also known as Persero.
As the only housing-focused bank in Indonesia, with mortgages making up 89% of its loan portfolio, Bank BTN acts as an accelerator for the government’s One Million Houses programme, which was launched in 2015 as a solution to a national housing backlog thought to stand at 11.4 million homes.
As the main distributor of government-subsidized mortgages, Bank BTN is well placed to be an agent of this state ambition, but its work has been impeded by Covid-19: the pandemic damaged economic activity and therefore individual purchasing power, reducing the demand for new mortgages and the ability to keep up payments on existing ones.
Consequently, BTN’s non-performing loan ratio is, at 4.37%, the highest among national banks. Tight liquidity has also made life difficult, and BTN faces a relatively high cost of funds.
BTN has therefore set about a transformation programme that aims to make it the best mortgage bank in southeast Asia by 2025. There are five elements to this ambition: repricing third-party funds and developing new savings products; developing millennial segment loans and expanding businesses along the housing value chain; building a digital mortgage ecosystem; improving and centralizing operations and processes; and strengthening equity.
While far from complete, the work is well under way. The new BTN Investa savings product and BTN Bisnis savings account have been launched, helping to re-price existing high-cost funds. The operational model of branch offices has been changed to encourage a deposit-centric mindset and a focus on the emerging affluent, and that is already showing up in an increase in cheque and savings accounts, which grew (off a low base) by 21.5% year on year. Partnerships are under way to link the bank to other parts of the value chain in real estate and to reach the so-called millennials. And digital offerings are developing rapidly, with mobile acquisitions up 55% year on year in 2021, and transaction volumes 73%.
There is more to do, but Bank BTN’s efforts, led by chief executive Haru Koesmahargyo, deserve recognition this year.
