Asiamoney best bank awards 2017: Indonesia


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Best domestic bank: Bank Central Asia

Best domestic bank: Bank Central Asia

With its 15 million customers, 1,200 branches and more than 17,200 ATMs, Bank Central Asia (BCA) is the largest privately-owned bank in Indonesia, and the third biggest as measured by assets, loans and deposits, after the state-owned duo Bank Mandiri and Bank Rakyat Indonesia (BRI). 

But in profit terms, it’s second behind the state-advantaged BRI and fast closing on that top spot. In August, BCA reported 10% higher net profits for the first half of 2017, posting earnings of Rph10.5 trillion ($788 million), on income that grew by 4.9% to Rph27.4 trillion. 

While that might be an argument for more reform of its state-owned enterprises, it certainly shows BCA is doing something right, as its non-performing loan ratio suggests. At a modest 1.5%, it is one of the lowest of all Indonesian banks, and compares to the industry average of 2.97%, as measured by Bank Indonesia, the central bank.

BCA’s corporate lending also grew, by 18.7% to Rph160.7 trillion to meet demand for credit. BCA’s consumer loan book was also up, by a healthy 18.4%.

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Best corporate and investment bank: Credit Suisse

When it comes to the investment banking league table in Indonesia, there’s Credit Suisse and then there’s daylight. In 2016-2017, it was first in equity capital markets, first in mergers and acquisitions, and first in non-sovereign loans. The only big table it did not top was sovereign loans, where it was sixth behind leaders HSBC and Deutsche Bank among others.

Credit Suisse says it has “dominated investment banking in Indonesia once again having done nearly all” the big deals. In M&A, its deal value of $3.3 billion was 8.5 times second-placed Goldman Sachs, led by its role as the buy-side adviser on the landmark $3 billion Chevron Geothermal acquisition. 

In equities, Credit Suisse made two of the big block trades out of Indonesia last year for retailer Matahari and property developer Puradelta Lestari. In debt, CS completed a busy 26 deals worth $3.6 billion

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Best international bank: DBS

DBS has been in Indonesia since 1989, in a country where being from Singapore has not always been popular with the business and political classes. So it has been a slow burn for DBS in building up a full-service operation across the islands.

DBS Indonesia, run by Paulus Sutisna, ex-HSBC and Citi, for the last two years, now boasts 44 branches and 1,600 employees across 13 of Indonesia’s big cities. More than that, the ‘localisation’ of DBS in Indonesia is evident from the league table in rupiah-denominated debt market, when DBS was beaten only by local banks and Malaysia’s CIMB (via its interest in a local bank). Moreover, with 21 issues, DBS’s deal flow was third behind big local players Mandiri and Indo Premier.

Corporate banking revenue at DBS Indonesia grew strongly in 2016, up by 11% year-on-year. DBS has launched aggressively into the Indonesian Reit market, with three mandates. Sutisna has also targeted Indonesia’s growing Islamic banking sector, with DBS showing growth in assets under management of 84% through 2016-17.

With a focus on Indonesia’s rising SME sector, DBS Indonesia has improved net profit by 75% increase in the first quarter of 2017, posting Rph263 billion ($20 million) as return on assets and return on equity came in at 2.16% and 13.45% respectively. 

What is the next frontier for DBS in Indonesia? Sutisna has identified digital banking, launching a paperless bank in August to tap some of the 130 million-and-rising Indonesians with a smartphone.

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Best bank for SMEs: Bank Mandiri

A rare glittering star in Indonesia’s fading state-owned corporate firmament, Mandiri is well-placed to service the country’s emergent small and medium-sized enterprises, with authorities channeling subsidies and advantages to the grassroots via Mandiri’s nationwide network. 

Tapping guaranteed fund sources might make a state bureaucracy a little limp but not so Mandiri. CEO Kartika Wirjoatmodjo sees it as an opportunity to advance the national economy while also spreading the message of financial inclusion in a country that has a long way to go. 

Mandiri’s SME loan book is valued at around Rph60 trillion ($4.5 billion). The bank has taken its SME message beyond Indonesia’s shores by targetting the country’s $9 billion-strong remittance army of domestic maids working in Hong Kong, Singapore and the Gulf, in campaigns encouraging them to prepare for their eventual return home to a small business, or to buy or improve a home or invest in education.

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Best bank for CSR: Bank Mandiri

As one of Indonesia’s leading civil servants, Mandiri chief executive Kartika Wirjoatmodjo takes his bank’s social commitments seriously. From disaster relief to raising healthcare standards and bringing remote communities and indigenous tribes into the economy, Mandiri’s CSR charter is focused on working alongside state campaigns to develop business and financial literacy across the 17,000-island archipelago. 

At times, it can seem a Sisyphean task. According to Indonesia’s Financial Services Authority, the financial literacy of Indonesians is around 22%, compared to Singapore at 96%, Malaysia at 81% and comparable Thailand’s 78%. Mandiri’s initiatives are as varied as they are dispersed across Indonesia. 

In southern Sumatra, Mandiri backs a training programme for local Batik craftsmen to transform their skills into businesses. In south-east Sulawesi, a community programme has empowered the seafaring Bajo people to develop their way of life into an eco-tourism initiative. In North Lombok, Mandiri has supported what it describes as the “cultural acculturation” of Hinduism, Animism and Islam into a sustainable tourism programme focused on the area’s unique heritage. 

Another programme eases the re-entry of the millions of Indonesian guest workers into the economy. Mandiri’s business-orientation programmes have been attended 36,000 young entrepreneurs from across Indonesia who, it is hoped, will become Mandiri customers.

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Djamin Nainggolan160x186
Djamin Nainggolan

Best digital bank: Bank Danamon

In a vast Indonesian market obsessed with ‘HahPeh,’ Bahasa shorthand for handphones, digital has become the new financial frontier for bankers. 

Indonesia’s government expects its digital economy to reach $130 billion by 2020, around 12% of its current commodity-led GDP. And as bandwidth becomes cheaper and access more widespread across the islands, Danamon has been more nimble than stodgier competitors, rolling out a range of digital options, accessed via its D-Mobile app, which by all accounts is easy to use. 

Danamon claims there were around 230,000 D-Mobile users by June 2017, with transactions growing 36% to more than 13 million transactions in the first half year of 2017. The SME-oriented Danamon Connect app has also had a good take-up. 

Now it gets interesting. Three of the country’s biggest business clans, the Riady, Salim and Widjaja families, each of whom owned banks before the bust of the late 1990s, are back in the business. They have bought small banks that they aim to turn into big ones online, with all manner of functionality. Having made a solid start with D-Mobile, now the challenge for Danamon and retail and alternative channel head Djamin Nainggolan is to cement that first-mover advantage in this emerging sector.

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Best private bank: DBS

Just as Singapore’s biggest bank starts to ramp up its acquisitorial push into private banking across Asia, its operation in Jakarta is tapping into an unexpected bonanza in Indonesia. 

That would be the near 1 million wealthy Indonesians who this year availed of the state’s invitation to reveal what was largely already known, that they were sitting on billions of undeclared assets. Indonesia’s tax amnesty unearthed $365 billion of previously undeclared assets, as evasive Indonesians took the opportunity to get on the books without any legal impact. Singapore authorities said some $5 billion was repatriated from the city-state’s banking system. 

That has wounded Singapore’s private bank sector, whose so-called ‘briefcase bankers’ got used to shuttling into Jakarta unlicenced to service Indonesian clients, much to the chagrin of people like Indonesia’s finance minister Sri Mulyani, who was pushing the tax amnesty. But what was surprising was that about 75% of the declared amount was actually held under-the-radar in Indonesia, assets that the Widodo government would now like invested in-country. 

Indonesia is intent on developing its wealth market, and DBS is stepping up. It expects its client base to leap six-fold from about 100,000 as it integrates its recent purchase of ANZ’s Indonesian wealth management book and pursues clients now legally above-the-radar. 

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