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Jakarta Post

Small banks struggle to survive amid tough competition

  • News Desk

    The Jakarta Post

Jakarta   /   Mon, March 4, 2019   /   03:11 pm
Small banks struggle to survive amid tough competition A security officer stands in front office of Bank Maspion in Jakarta in this undated photo. (kontan.co.id/Baihaki)

The profits of small banks, which are known as Book I and II banks, have grown slowly since 2015 because they cannot compete with large lenders.

According to Indonesia Banking Statistics, Book I banks only booked profits of Rp 700 billion (US$49.59 million) last year from Rp 116 billion in 2017, Rp 861 trillion in 2016 and Rp 1.57 trillion in 2015. Similarly, the profits of Book II banks declined to Rp 9.18 trillion last year from Rp 10.28 trillion in 2017, Rp 10.32 trillion in 2016 and Rp 9.94 trillion in 2015.

Bank Maspion president director Herman Halim said the shareholders of small banks would likely help their banks survive as long as they were in a healthy condition.

“There are many bank owners who defend their banks [amid the tough competition],” Herman said on Sunday as quoted by kontan.co.id, adding that as long as banks were in a healthy condition they could be maintained.

He said Bank Maspion booked Rp 70.01 billion in profit last year or a growth of 2.18 percent compared to 2017.

Meanwhile, Bank Kesejahteraan Ekonomi (BKE) president director Sasmaya Tahuleley confirmed that competition between small and large banks in recent years had become tougher. “The Financial Service Authority has advised [small banks] to carry out consolidations,” said Sasmaya, referring to the possible acquisition of small banks by large ones.

BKE booked Rp 18.23 billion in profit last year, a growth of 27.39 percent compared to 2017.

Sasmaya said the bank planned to hold an initial public offering (IPO) this year in the hope that it could be upgraded to a Book II bank. (bbn)