Corporate Secretary

Some strategic measures taken in 2015 are as follow:

• LOANS
Improve the total number of customers as well as to improve the loan outstanding balance from the debtors with the strategies as follow:

1. Japanese Customer
Bank capitalizes on opportunities from the increasing investment flow of Japanese companies in Indonesia as well as optimizes good relationship with Resona Group to obtain information and collaborate to improve loan portfolio particularly of Japanese related business.

2. Local Customers
Bank capitalizes on the existing main customer network to obtain information about local companies that have good quality and use the network to build business relationship with new local companies as well as provide more facilities or disburse loan to existing customers, which have good quality.

3. China Corporation Customers
On June 2015, Bank has recruited Head of Business Development Division 8 which will focuses on China corporations. Bank also optimizes good relationships with The Bank of East Asia Ltd., Hong Kong to obtain information about China’s investment flow to Indonesia. In order to support banking transaction activity, Bank conducted additional multicurrency for CNY Currency (China Yuan/Ren Min Bi) for banking transaction. This additional multicurrency will be effectively implemented on 2016.

• CAPITAL
The Bank’s capital strategy in 2015 is to increase the Bank’s core capital by strengthening the capital basis by controlling or managing dividend payout ratio and remain acceptable, to increase the Bank’s operational income from the transaction and to execute the nonperforming loan settlement as well as to disburse loan with prudential principle. On April 2015 Bank has realized the subordinated borrowing from Resona Bank, Ltd., Japan amounted to USD50 million maturing in 10 years. Furthermore, the Bank’s gradual efforts to increase the Bank’s group from BUKU 2 to BUKU 3. One effort executed by the Bank was the improvement of authorized capital to Rp1 trillion from IDR500 billion.

• FUNDING
Bank provides competitive interest rate in accordance with the Bank’s risk appetite and the Indonesia Financial Services Authority (FSA) direction as a step to increase Third Party Funds. Bank also adds the facilities of local or foreign interbank in the form of loan facility both for buffer liquidity or for the funding source of loan expansion. For the debt issuance in the form of Medium Term Notes (MTN) as the source of long term funding to support the loan expansion is delayed up to 2016.

• OPERATIONAL
To increase the customer service by reducing complaints, improving work speed and accuracy as well as preventing work fault by considering risk aspects and prudential principles. On June 2015, the Bank has launched the new internet banking application to fulfill the customers need and provide ease in doing transaction.

• HUMAN RESOURCES AND ORGANIZATION DEVELOPMENT
In 2015, regarding the development of human resources, the Bank provided internal and external education and training for all employees. As the form of organization development, the Bank established cooperation with independent consultant to improve strategic division functions. Throughout 2015, the Bank has dispatched 2 (two) employee assignments to Japan regarding to the development program of Overseas Migrant Worker/Labour Migrant (TKI) as Expatriate Worker (TKA) companion in Business Dvelopment Division. The long term objective of this program is to delegate the related employee as the Bank’s Account Officer.

• COMPLIANCE
In 2015, Bank was following up the audit findings both from FSA and other auditors as well as implementing the established commitments. The Bank has also implemented recommendation from GCG team in order to increase and supervise the GCG implementation quality, as well as to increase compliance culture in all organization level sustainably.

• TECHNOLOGY AND INFORMATION SYSTEM
The Bank changed internet banking application system into a new one in June 2015 in order to fulfill the customers banking needs. The Bank will continue to monitor the application as well as to develop and complete the application to be able to run in accordance with the Bank’s technology and business development. The Bank is developing the systems which required by the authorized institution such as:

- BI-RTGS Gen II, has been implemented in November 2015.
- SKNBI Gen II, has been implemented in June 2015.
- MPN Gen II, in 2015 Bank still on the preparation phase and waits for the implementation approval from the Ministry of Finance. MPN Gen II officially implemented in January 2016.

In addition, to catch up with the recent technology development and to support the business development, the Bank also develops the information technology system as follows:

- Preparation to determine upgrade or change the Bank’s core banking. In its implementation, the Bank cooperates with NTT Data Indonesia to conduct business study which will become the basis in the making of the new requirement core banking.
- Preparation related to the change plan of internal web application (Cybozu) into Intramart. The Bank cooperates with NTT Data Indonesia to develop the internal web application. Until the end of 2015, the Bank has conducted User Acceptance Test (UAT) to several users.

• RISK MANAGEMENT
2015 was a preparation year of Basel III implementation related to the Liquidity Coverage Ratio (LCR), in December 2015. The Bank is preparing to implement LCR calculation based on FSA Regulation where the Bank monitors the liquidity and changes the calculation methods of available minimum fund by using LCR calculation framework.

Strategic Plan 2016

Bank has prepared strategic plans to enhance the customer service and to support the Bank’s business and operational activities, namely:

• Increasing credit risk awareness
To increase credit risk awareness, the Bank will strives to play an active role and get involved in maintaining credit quality through tight monitoring, one of them is to provide continuous credit risk training for all employees, especially marketing division.

• Increasing the Bank’s net profit
In 2016, Bank targets the net profit to increase by 36.43%. The Bank’s step to increase the net profit income is by increasing the Bank’s loan exchange rate gradually and decreasing the deposit interest rate but still in competitive rate with other banks.

• Funding
In the upcoming 2016, Bank will strives to increase the raised fund from Third Party Fund, securities issuance or other lending from local and foreign interbank.To increase the Third Party Fund, the strategy is to increase the marketing function to raise customers fund and cooperate with Treasury Division in providing competitive interest rate. In addition, the Bank is planning to issue Medium Term Notes (MTN) VI securities in February 2016 amounted to IDR500 billion to support the funding in IDR currency.

Both bilateral loans from local bank for the IDR and foreign currency loans for US Dollar currency loan will still be applied.It is expected that in 2016, the funds in USD currency can betransferred into IDR with forex swap transactions and/or CrossCurrency Swap (CCS) which is planned to be conducted in the second semester of 2016.

• Credit
In 2016, the Bank plans to increase loan disbursement approximately 18.07% of the position in 2015. The bank will also focuses more on the disbursement of IDR loan, but still consider the foreign currency loan. It is associated with the requirement to use the IDR currency for transactions in the Republic of Indonesia territory.

Although the Business Development 8 Division (local Chinese related) has started running since 2015, but the Bank still maintains the Bank’s business model by focusing in loan disbursement to Japanese and local companies.

Another strategy is the Bank will utilize the Japanese investment to Indonesia through cooperation with Resona Bank Group to obtain information about potential Japanese companies and prospective major network of local customers. The Bank will also optimize all marketing functions both in the Head Office and Branch Offices thus the loan disbursement could be widely spread.

• Capital
Bank is gradually increases the capital from BUKU 2 to BUKU 3, thus in 2016 the Bank will strive to improve the operating profit from the Bank transaction activities, to improve loan disbursement quality qualified debtors and the Bank will continue to obtain a consensus from shareholders to increase the paid up capital. The authorized capital increase in June 2015 to IDR1 trillion from IDR500 billion was the strategy to provide space for shareholders to increase their paid up capital.

• Technology Information and Accounting System
In 2016, the Bank will continue to enhance the internet banking application service to be dependable in fulfilling the customers banking transactions need. Year 2016 will also become the determination year whether the Bank will upgrade or replace the core banking system and other critical applications to suit the Bank’s conditions and needs.

• Human Resources Development
In developing the management information system related to human resources, in 2016, the Bank plans to cooperate with third parties to develop the Human Resource Information System (HRIS).

Bank will also continue to provide continuous education and training to all employees in accordance with their respective fields. The Bank will continue the training program to Resona Bank, Ltd., Japan for the local employee which becomes the Expatriate Worker (TKA) companion. The long term objectiveof this program is to delegate the related employee as the Account Officer in the Business Development Division.

• Risk Management
In terms of risk management, the Bank will increase the level of risk profile minimum 2 (two) and create risk culture by disseminating the importance of risk awareness, raising credit risk awareness, improving liquidity and market risk analyzing process, improving the process and management of operational risk, reputation risk and strategic risk as well as preparing all required aspects in implementing Basel III as early as possible in order to run well.

• Compliance
In 2016, the Bank will increase the GCG implementation level and create a compliance culture. The Bank will follow up on audit findings both from the FSA and other auditors and implement an action plan that aims to improve the Bank’s quality and GCG rank. The Bank will also implements the recommendations from Integrated Governance Committee in order to improve and monitor the GCG implementation quality.

• Audit
Bank will perform continuous improvements and be disciplined in evaluating and improving risk management effectivity, control and governance including to improve the audit tools and ensure the resource internal audit adequacy as well as to continuously improve and standardise its procedures.