Banking
From The Report: Indonesia 2018
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With a population of over 250m and the fourth-largest economy in Asia, Indonesia is one of the world’s biggest potential banking markets. Growth in profitability, loans and assets has been stronger than in other ASEAN countries, although an economic slowdown in 2015 and early 2016 curbed sector growth before an upswing in 2017. The Indonesian market has historically been – and continues to be – highly profitable in comparison to more developed economies. The banking sector still offers plenty of untapped potential and room for competition, leaving opportunities for higher margins and new product development.

This chapter contains interviews with Kartika Wirjoatmodjo, President Director, Bank Mandiri; Jahja Setiaatmadja, President Director, BCA; Suprajarto, President Director, Banks Rakyat Indonesia; and Batara Sianturi, CEO, Citi Indonesia; and Chairman, International Banks Association of Indonesia.

Articles from this Chapter

Overview

Primed for growth: Islamic segment and financial technology expected to offer significant opportunities going forward
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With a population of approximately 260m and the fourth-largest economy in Asia, Indonesia is one of the world’s biggest potential banking markets. Growth in profitability, loans and assets has been stronger than in other ASEAN countries, although an economic slowdown in 2015 and early 2016 curbed sector growth before an upswing in 2017. The Indonesian market has historically been – and continues to be – highly profitable in comparison to more developed economies. The banking sector…

Interview

Collective effort: Kartika Wirjoatmodjo, President Director, Bank Mandiri, on strengths and trends in the domestic banking sector
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Interview: Kartika Wirjoatmodjo How do you assess the level of liquidity in the domestic banking sector? KARTIKA WIRJOATMODJO: Indonesia is one of the most profitable banking sectors in the world, with a net interest margin of about 5.5% industry wide and a current non-performing loan ratio of 3%, which is reasonably low. The principle strength of the sector is managing risk in capital levels. Considering Basel III regulations, most banks in Indonesia are well capitalised. Bank Mandiri, for example,…

Interview

Following the trend: Jahja Setiaatmadja, President Director, BCA, on supporting and facilitating economic growth
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Interview: Jahja Setiaatmadja How can infrastructure development reduce the country’s reliance on commodities? JAHJA SETIAATMADJA: The economy has improved since the economic slowdown in 2014 and 2015, which was largely due to the decrease in commodity prices. If one looks at the past, Indonesia experienced a golden era between 2008 and 2013, but it really started to slowdown in 2015 and in 2016. However, if one looks at the end of 2016 and up until the present day, it is still recovering, especially…

Analysis

Overseeing the industry: Establishing policies and guidelines for regulatory oversight in an evolving market is a key government priority
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The profitable and rapidly growing banking sector continues to attract interest from domestic and international financial institutions seeking to access the potential of the still largely underbanked population. To ensure financial services continue to advance in a stable manner, government regulators are working to adjust policies and regulations to protect the sector and secure its future. Following its creation in 2011 and its later assumption of regulatory duties from the central bank,…

Interview

Helping hands: Suprajarto, President Director, Bank Rakyat Indonesia (BRI), on funding micro-, small and medium-sized enterprises (MSMEs)
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Interview: Suprajarto How can the banking sector support MSMEs? SUPRAJARTO: Around 70% of 56m MSMEs still lack funding, a gap that needs to be bridged in order to support these companies, which represent a huge part of the country’s economy. Most of the MSMEs are unbankable, a challenge that must be solved between the banking sector and the government. Our aim is to keep increasing the growth of the MSME segment in our portfolio. Our current portion of MSME lending is 75%, around Rp490trn ($36.9bn),…

Interview

Forward momentum: Batara Sianturi, CEO, Citi Indonesia; and Chairman, International Banks Association of Indonesia, on factors driving sector expansion
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Interview: Batara Sianturi How could innovations in payment solutions facilitate the growth of e-commerce? BATARA SIANTURI: When we consider ways to increase cashless transactions in the e-commerce market, we see the importance of electronic payments, which currently can only occur through credit cards, debit cards and e-wallets. Credit cards continue to be one of the most popular means of payment in e-commerce, and they typically have lower cancellation rates than other payment methods. If we…

Analysis

Wireless world: Technology is changing the structure of the sector, expanding financial inclusion and available markets
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In an increasingly digitalised global market, the transition from brick-and-mortar institutions to electronic applications is occurring in various industries, and electronic transactions are replacing traditional commerce in both the personal and professional arenas. Banking is pivotal to the expansion of financial technology ( fin-tech) as services increasingly move online. While many early innovations in fintech developed in technology hubs such as Silicon Valley, the proliferation of…