Bank Resona Perdania has taken a numerous strategic steps and focus in consolidation effort making 2016 as a foundation to the sustainable business growth and also contribute to the Indonesia economy
Dear respected Shareholders and other Stakeholders,
In general, global economy in 2016 still experience a slowdown and uncertainties in global financial markets, resulting in the underperformance of global economic recovery below the expectations of the economists and business players. Such condition was also triggered by the slow economic growth of developed countries, except for the United States’ positive growth. Meanwhile, despite uncertainties, the global financial markets improved in line with the narrowing divergence of monetary policies among developed countries. The risk impact of the China economy was expected to be a stimulus for the world economy that has not recovered as expected.
Domestically, despite the slow recovery of the global economy, national economy was able to show positive growth. This is indicated by the increasing economic growth (Gross Domestic Product) to 5.02% in 2016 from 4.88% in 2015.
Such economic growth was still not balanced with the role of the banking sector as a financial intermediary function. Loan growth in 2016 at 7.9% remains slower than growth in 2015 at 10.5%. Such slow loan growth was contribute by unfavorable structural issues, such as the imbalance of the industry structure and low productivity, as well as the banks’ enhancement of its prudence in distributing loans.
Nonetheless, the national banking industry managed to record positive profitability and capital, with an average Return on Assets (ROA) of 2.2% and an average Capital Adequacy Ratio (CAR) of 22.9% in year 2016.
Despite the unstable and challenging economic and national banking conditions in 2016, Bank Resona Perdania (Bank) was able to overcome such challenges by taking numerous strategic policies for internal consolidation. It is manifested through the improvement and reinforcement of functions in various fields, improvement of workflow for efficiency and follow up on arising issues with the best solutions. All policies and improvement measures were taken to make 2016 the foundation for the Bank’s sustainable development in the coming years.
In every strategic and policy steps taken by Board of Directors also supported by good performance from a number of committees established by Board of Directors in accordance with the Bank’s needs, such as Credit Policy Committee, Credit Committee, Technology and Information System Committee, Asset and Liabilities Committee, Product Research and Development Committee and also Integrated Risk Management Committee. Board of Directors assessed that in year 2016 the committees under Board of Directors had performed their job with excellence.
The Bank’s focus throughout 2016 was primarily on asset quality improvement. The Bank enhanced its asset quality by implementing a more selective loan disbursement process and applying the prudent principles in maintaining the Bank’s performance.
As consolidation strategies, per December 2016, the Bank booked an asset of IDR15.44 trillion or decreased by 9.1% from 2015. The Bank’s total disbursed loan declined by 7.3% to IDR9.93 trillion compared to the amount last year. In 2016, Bank continues to make an effort towards improvement on earning asset quality through an improvement in credit risk management, improvement in credit risk awareness to all Bank’s elements and settlement of some non performing loan. As of 2016, Bank gross NPL and net NPL ratio respectively at 2.10% and 1.29%.
In terms of funding, in February 2016, the Bank successfully issued a Medium Term Note VI of IDR500 billion with idAA- (double A minus). This issuance shows the level of trust and support of the Bank's stakeholders to the Bank. In 2016, the Bank recorded a borrowing of IDR3.85 trillion and the total third party funds of IDR7.39 trillion.
The Bank’s profitability performance was fairly satisfactory, in 2016 Bank still recorded profit after tax at IDR148.66 billion. Despite the profit achievement was decreased by 13.5%, such profit achievement is still sufficient and given a positive contribution to the Bank's capital.
In addition, the Bank has strong capital adequacy in which in December 2016 the CAR ratio reached 26.82% or increased, compared to the CAR ratio of 24.04% in 2015.
The Challenges in 2016 and Target Vs Achievement
In 2016, the challenges faced by the Bank in implementing its business include the macro economic condition which was not fully conducive and the declining asset quality. The NPL pressure arising from the decreasing loan quality in some economic sectors has impacted the formation of a high provision cost.
Compared to the Bank's Business Plan individually, the performance achievement in 2016 can be considered positive with the total asset of 97.6% from the target, the profit after tax of 70.0% from the target, and the total CAR capital of 102.6% from the target.
The good financial performance in 2016 was achieved through numerous strategic initiatives taken by the Bank, including:
The Bank carries out internal improvements thatinclude enhancement of divisions’ functions, operational process refinement, human resources development, credit process improvement and business operational efficiency. All of these in turn will serve as the Bank’s foundation to grow and develop in the coming years.
The Bank increases its credit risk awareness in every unit relating to loan process, increase of debtors from both local and Japanese companies and optimization of cooperation with the parent company in financing the newly established Japanese companies.
A side from main credit disbursement to manufacturing sector, in line with the Indonesian government policy, the Bank’s supports the government programs indirectly to the strategic domestic economic sectors, among others the energy, fishery and tourism sectors. Such support is conducted through credit disbursement to debtors being the supporting companies of those sectors. The Bank also supports the export loan disbursement to the non-oil and gas sector in 2016 that was recorded at IDR1.8 trillion.
The Bank strengthens its customer base structure to support the increase in the funding sources to achieve low cost fund and lower the funding concentration risk.
The Bank consistently maintains its profit and improves the quality of loan for qualified debtors as to reduce the Reserve for Impairment Loss, and the Bank will also continue to attain consensus or collaboration to increase the Bank’s capital, such as paid-up capital, from the shareholders.
Information and Technology Systems Strategy
The Bank continues to refine its internet banking application to be more effective and reliable as to meet the customers’ banking transaction needs, and plans to upgrade or replace the core banking systems as to satisfy the Bank’s business needs in the future.
In 2016, the Bank obtained various major awards, such as:
Infobank Trophy 2016 from Infobank Magazine for the “Excellent” financial performance in the past 10 years and an award for “Excellent” financial performance in 2015.
Indonesian Banking Award V-2016 from Economic Review Magazine, PT Bank Resona Perdania received 9 (nine) award categories, including the 3rd rank in BUKU 2 category, 1st rank in Information Technology and Risk Management categories, 2nd rank in Human Capital category, and 3rd rank in Good Corporate Governance category.
J.P. Morgan Recognition Award of 2016, in which PT Bank Resona Perdania was awarded The 2016 Elite Quality Recognition Award for the Excellent Achievement as the Best in Class of MT 202 STP Rate 99.92% and the Best in Class of MT 103 STP Rate 98.95% from J.P. Morgan Chase Bank, New York. It is a proof of PT Bank Resona Perdania’s consistency in implementing its qualified and high-standard remittance management.
Warta Ekonomi Best Banking Award 2016, in which the Bank was awarded the Winner of Best Banking Brand 2016 for Best Reputation, Best Service, and Most Efficient Title.
Implementation of Good Governance, Integrated Governance and Integrated Risk Management
Under the concept of good governance, the Bank along with its supporting aspects has successfully, consistently and continually applied the good governance principles in all operational aspects. With reference to POJK No. 18/POJK.03/2014 on Implementation of Integrated Governance for Financial Conglomeration as the guideline, the Bank procures that the points of such regulation have been met in a comprehensive manner. The establishment of Integrated Governance Committee, the formulation of Integrated Governance Guidelines and adjustments to the duties and responsibilities of the Compliance Division, Risk Management Division and Internal Audit Division to calculate integrated risks have been carried out since 2015 and improved in 2016.
Transparency, accountability, responsibility, independency and fairness are the principles held by the Bank to continuously protect the rights of all stakeholders and to maintain a sound business. Such consistency is reflected in the results of the self-assessment of good governance and Integrated Governance in 2016 which, again, received a GOOD predicate.
In terms of the composition of the Board of Directors, as of October 1, 2016, Mr. Muhammad Akbar officially resigned from his position as Director. The position of the Director in charge of Risk Management Division and Credit Examination Division is temporarily held by Mr. B. Budijanto Jahja concurrently with the position of the Director in charge of Compliance Function. However, due to the concurrence of the function, Mr. B. Budijanto Jahja does not reserve a voting right and other decision making rights in conflict with his function as the Compliance Director.
As of January 6, 2017, such concurrent position becomes ineffective due to the appointment of Mr. R. Djoko Prayitno as the Director in charge of Risk Management Division and Credit Examination Division.
The Bank as the Main Entity has implemented integrated risk management based on POJK No. 17/POJK.03/2014 on Implementation of Integrated Risk Management for Financial Conglomeration.
The Bank’s Integrated Risk Management Committee has performed its duties properly in accordance with the 4 main principles set out by the OJK, including:
2. Risk Management Framework;
3. Risk Management Process;
4. Internal Control System.
Moving Toward 2017
The Bank is optimistic of the conditions in 2017, in which the global and national economic conditions emphasize that the recovery phase will continue in terms of banking credit and capital market financing. The increasing economic activities will also continue to occur. Economic growth is also expected to increase at 5.0%-5.4%, in line with the optimism of domestic demand and Indonesia’s increasing export commodity prices. The banking sector is also predicted to continue to improve. Loan and third party fund are expected to grow respectively around 10% - 12% and 9% - 11%.
The Bank will address the economic growth by optimizing the opportunities and establishing strategic measures to improve the Bank’s performance and assets growth in the coming years. The Bank will continuously provide better service to the customer’s needs, develop excellent resources, achieve better productivity and effectiveness as well as ensure the sustainability of the Bank's financial growth.
It is strengthened by the Bank’s experience in serving the financial business and banking industry for more than 58 years, so that it has been widely recognized by the Japanese companies, Indonesia-Japan joint venture companies as well as local companies conducting business with Japanese companies. The Bank is also optimistic in expanding its business and providing a better banking service through a solid, independent and professional management in making decisions related to the Bank's business. In accomplishing those goals, the Bank is supported by expatriate employees from Japan with extensive experience in banking and local employees with loyalty, capability and proficiency in performing the Bank’s operations. In addition, the database of Indonesia-Japan joint venture companies and local companies that have business relations with Japanese customers also facilitates the Bank in the process.
The Bank will also pay great attention to the Bank’s supporting aspects such as Integrated Governance, Human Resources (HR), capital structure, and Information Technology (IT). Internal control will be enhanced by improving the good governance, risk management, compliance, and internal audit functions. HR adequacy in each working unit will be balanced with skills and professionalism. The Bank’s capital will be maintained by increasing asset quality and profitability. As for the IT aspects, the Bank is planning to improve the core banking system and develop new services such as MT940 and e-statement. All these efforts are the solid manifestation of the Bank’s commitment to improve services and provide the best banking experience to the customers.
Finally, on behalf of the entire Board of Directors, I would like to express our profound appreciation to everyone who has invariably supported Bank Resona Perdania, to the Board of Commissioners for its supervision and directions, to the shareholders for their trust so that the Bank can continue to grow for the better, to all employees for their dedication and hard work in facing any challenges, and to all customers for the loyalty to the Bank. We would also like to express our great appreciation to the regulators that guide us in our efforts to be an integrated and reliable entity. Moving forward, Bank Resona Perdania will always provide its best efforts and continue to improve itself to become “Your Real Partner”.
On behalf of the Board of Directors,