State-owned Bank Tabungan Negara (BTN) is aiming to focus on improving its asset quality this year and boost low-cost funds amid rising bad loans and eroded profits during the COVID-19 outbreak.
The bank’s finance, planning and treasury director Nixon LP Napitupulu stated that among the bank’s strategies was attracting more low-cost funds with a bundled product called the BTN Solusi program, as well as strengthening its collection management system.
“We are bundling [our products], if they [companies] want to do their payroll with us, we will give a housing loan rate of 6.99 percent. The purpose is to attract people to save or move their payroll to BTN,” Nixon said during a virtual event hosted by the Indonesia Stock Exchange (IDX) on Tuesday.
As of June 30, the bank had attained almost 16,000 new payrolls from the program.
BTN recorded a 2.99 percent year-on-year (yoy) increase of third-party funds in the first half of the year to Rp 226.3 trillion (US$15.4 billion), while Indonesian banks' third-party funds grew 7.95 percent annually in June.
BTN has revised down its third-party funds growth target to between 8 and 9 percent this year, much lower than its initial target of 13 to 15 percent.
“Our third-party funds have strengthened during the pandemic, and it is especially having an effect on our liquidity. Because our loan growth is lower than under normal circumstances,” Nixon added.
In the first six months of the year, BTN's total loan disbursement increased just 0.32 percent to Rp 251.84 trillion yoy.
With that, BTN, which focuses on mortgages, saw a 41 percent fall in profit yoy in the year’s first half to Rp 768 billion in net profit during the period.
Its housing loans grew 0.96 percent yoy to Rp 228.92 trillion from Rp 226.75 trillion, backed by the subsidized mortgage segment, which grew 5.84 percent yoy while other segments within the housing loans sector contracted.
Meanwhile, to boost its collection system, the bank is conducting efforts such as establishing two new divisions to accelerate the settlement of bad loans while improving its loan restructuring business process, according to Nixon.
BTN reported a jump in its non-performing loan (NPL) ratio to 4.71 percent as of June, much higher than the 3.32 percent ratio recorded in the same period last year. It expects to further lower the ratio to 4.5 percent by the end of the year.
Indonesian banks' NPL, at the same time, reached 3.1 percent in June this year.
The bank is also developing its digital platform as the pandemic has accelerated digital adoption among its customers. The bank saw its mobile banking and internet banking users soar 29.88 percent and 139.25 percent, respectively, in the first half of the year in comparison to the same period last year.
The value of mobile banking transactions rose 31.52 percent yoy to Rp 5.69 trillion while its internet banking transaction value increased 13.90 percent yoy to Rp 492.66 billion.
The digital system has also aided its loan growth, as it eyes a 5 to 6 percent increase in loan and financing this year, lower than the initial target of 8 to 10 percent.
“During the pandemic, BTN has to always keep up with the macroeconomic trend and the industry, so then adjustment of the business target has to continue,” BTN chief economist Winang Budoyo said.
The bank reported significant growth in its online property portal btnproperti.co.id. In the first half of this year alone, it saw 2.91 million visitors and almost 12,000 loan applicants, with loans totaling Rp 697.58 billion.
The bank’s shares, traded on the IDX under the code BBTN, slipped 0.32 percent to Rp 1,565 per share on Wednesday, on the other hand, the benchmark Jakarta Composite Index (JCI) gained 0.03 percent.