Banking
From The Report: Indonesia 2017
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With rising levels of public participation, a robust regulatory framework and high profitability at most institutions, Indonesia’s banking sector performed strongly in 2015-16, building on nearly a decade of expansion and rapidly increasing returns. The sector comprises 118 commercial banks and more than 1600 rural regional banks – the latter of which are allowed to operate only in a relatively small, predetermined geographical area. The industry boasted combined assets of Rp6198.15trn ($452.5bn) at the end of January 2016, the majority of which were held in a handful of leading institutions.

This chapter contains interviews with Kartika Wirjoatmodjo, President-Director, Bank Mandiri; Asmawi Syam, President-Director, Bank Rakyat Indonesia; and Batari Sianturi, CEO, Citi Indonesia, and Chairman, International Banks Association of Indonesia.

Articles from this Chapter

Overview

Solid prospects: Strong fundamentals and recent performance indicate great potential for local lenders
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With rising levels of public participation, a robust regulatory framework in place and high profitability at most institutions, in 2015-16 Indonesia’s banking sector performed strongly, building on nearly a decade of expansion and rapidly increasing returns. Home to 118 commercial banks and more than 1600 rural regional banks – the latter of which are allowed to operate only in a relatively small, predetermined geographical area. The industry boasted combined assets of Rp6198.15trn ($452.5bn)…

Interview

Structural changes: OBG talks to Kartika Wirjoatmodjo, President Director, Bank Mandiri
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Interview:Kartika Wirjoatmodjo What has been the impact of the economic slowdown in non-performing loan (NPL) ratios? KARTIKA WIRJOATMODJO: The NPL ratio in the banking sector is around 2.8%, but we will still see three or four quarters of weakening in the quality of loans. However, we believe the current cycle in Indonesia is better than what has been seen in other countries like Brazil, Russia, India and China. Despite the decrease in income from commodities, Indonesia still has strong…

Analysis

Principled lending: The sharia-compliant segment stands to benefit from new state-led initiatives
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Home to around Rp617trn ($45bn) in Islamic financial assets as of the end of 2015, according to data from the Financial Services Authority (OJK), Indonesia’s sharia-compliant financial services segment is widely considered to be on a growth path. Indeed, in terms of total assets, the Islamic segment posted a compound annual growth rate of 24% during the period 2009-14, which represents significantly faster expansion than the country’s financial industry as a whole, which grew by 10% per annum.…

Interview

Banking prospects: OBG talks to Asmawi Syam, President Director, Bank Rakyat Indonesia
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Interview:Asmawi Syam How would you assess the Indonesian banking sector’s potential for growth? ASMAWI SYAM: In general, the banking industry in Indonesia is running well. The non-performing loans (NPL) ratio is at a good level (2.71%) and the capital adequacy ratio (CAR) is 19.26 % (all year end 2015). Intermediation has been successful and the loan-to-deposit ratio is at 85.63%. In general, the banking industry is also able to manage business properly so that it can record profits. In…

Interview

Digital solutions: OBG talks to Batara Sianturi, CEO, Citi Indonesia; and Chairman, International Banks Association of Indonesia
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Interview:Batara Sianturi To what extent can mobile banking help increase banking penetration generally? BATARA SIANTURI: There is still a lot to do in terms of financial education, financial literacy and financial inclusion. But we are quite optimistic, because the velocity of change is increasing, especially when it comes to the use of technology. The good news is that while banking penetration is low, mobile phone penetration is high: there are more mobile phones than people in Indonesia.…

Analysis

Towards a single market: The sector prepares to compete in an expanded market
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As the largest economy and home to the largest population among the 10 ASEAN member states, Indonesia is considered to be a driving force behind the establishment of the ASEAN Economic Community (AEC), which formally launched in 2015. The AEC project, which has been under way since the mid-2000s, aims to integrate the region into a single market and production base by allowing for the free flow of goods and services, uninhibited immigration for skilled labourers and the liberalisation of the regional…