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Aggressive state banks struggle to shine
All four state-owned banks went full throttle last year, recording double-digit lending growth above the industry’s average growth and the central bank’s target, but leading to rising bad debts that prompted them to set aside larger provisions
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All four state-owned banks went full throttle last year, recording double-digit lending growth above the industry’s average growth and the central bank’s target, but leading to rising bad debts that prompted them to set aside larger provisions.
Publicly listed lender Bank Negara Indonesia (BNI) booked the highest loan growth among its peers last year, while Bank Mandiri — the country’s largest lender by assets — topped the list in terms of value. The most profitable lender, BRI, on the other hand managed to maintain its lucrativeness.
BNI disbursed 20.6 percent more in loans last year than in 2015, bringing its outstanding loans to Rp 393.28 trillion (US$29.5 billion) as of December last year. It was high above Bank Indonesia’s 7 to 9 percent targeted lending growth.
Financial Services Authority (OJK) data recorded a 7.87 percent increase in loans last year. The OJK recorded gross nonperforming loans (NPLs) at 2.93 percent of total loans last year and net NPL of 1.2 percent.
Meanwhile, mortgage specialist lender Bank Tabungan Negara (BTN) recorded a 18.34 percent loan growth year-on-year (yoy), followed by Bank Rakyat Indonesia (BRI) and Bank Mandiri with 13.8 percent and 11.2 percent, respectively.
Bank Mandiri continued to dominate in terms of value with Rp 662 trillion in disbursed loans, followed by BRI with Rp 635.3 trillion, BNI with Rp 393.28 trillion and BTN with Rp 164.44 trillion. However, it failed in terms of net profit, stumbling by 32 percent, while other state-owned lenders saw increased profit.
“Drops in commodity prices adversely affected people’s purchasing power,” Bank Mandiri president director Kartika “Tiko” Wirjoatmodjo said recently. “The NPLs initially occurred in the commodity sector, such as mining, coal, oil and gas, and later spread to the consumer sector.”
Plantations, business service, electricity and mining were among the top 10 loan expansion sectors for Mandiri, whose core business is corporate banking, last year.
Weak economic growth hit Bank Mandiri the hardest as reflected by its soaring NPL to 4 percent, from 2.6 percent in 2015. It disbursed Rp 231.3 trillion in loans to big corporations, or more than one-third of its total lending as of December last year, with an NPL ratio of 1.01 percent for the segment.
Meanwhile, loans to medium-sized business in the commercial segment accounted for almost 28 percent, or worth Rp 165.2 trillion, with an NPL of 9.32 percent, the highest among other segments. In total, the two segments, which involve corporate debtors, made up more than 60 percent of Bank Mandiri’s total loans.
Although operating in a similar core business, BNI found its savior in President Joko “Jokowi” Widodo’s infrastructure boom. Its loans to infrastructure-related firms and government projects enhanced its corporate and state-owned enterprises (SOEs) segment, which grew by 24 percent yoy to Rp 195.3 trillion last year.
While BNI’s accumulative NPLs rose to a tolerable level of 3 percent last year, from 2.7 percent in 2015, the corporate and SOE segments only recorded a 2.7 percent NPL rate. Loans to manufacturing, agriculture and electricity, gas and water expanded the fastest with state electricity company PLN receiving Rp 8.8 trillion in loans during the period.
“Talking about the corporate segment, potential lies not only in SOEs but also other sectors with regard to the government’s plan to develop power plants, toll roads and other [infrastructure],” BNI vice president director Suprajarto said.
This year, the lender has Rp 415 trillion worth of loans in the pipeline for the segment.
In the micro, small and medium enterprises (MSMEs) segment, BRI strengthened its foothold as an MSME specialist. It channeled Rp 211.5 trillion in loans to the segment as of December or about 33 percent of its total credit portfolio, with a relatively low NPL of 0.99 percent.
The lender booked a 2.03 percent NPL rate last year from 2.02 percent the previous year, prompting the management to maintain its focus on the segment despite the growing contribution of the corporate segment. “The fact is we can grow above the market average even though we focus on MSMEs,” BRI vice president director Sunarso said.
BTN, meanwhile, is the only state-owned lender that saw lower NPL last year than in 2015. Its NPLs stood at 2.84 percent last year versus 3.42 percent the previous year.
Bahana Securities analyst Henry Wibowo believes that Indonesia’s banking sector will see a silver lining this year in the government’s infrastructure projects and improving commodity prices. “It will play a crucial role in funding infrastructure projects and serving the growing number of consumer households,” he wrote in a research note. (dra)
