Business and Operations Report
Treasury and Capital Market showed high performance in the midst of a very
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supported by collaboration with the Company’s other units in conducting training for Treasury and cross selling ,.+ 10/ċ
EXTERNAL AND INTERNAL OUTLOOKS
In 2013, the Indonesian macro economy suffered a decline in line with BI’s increasing benchmark from 5.75% to 7.5% as a response to higher inflation. The Capital Market also suffered a decline followed by the sinking value of Rupiah against the US Dollar due to the widening trade deficit in 2013.
TREASURY
CIMB Niaga’s Treasury strategy is to consistently execute the four strategies initiated in 2012: integration, innovation, optimization, and adaptation.
Integration, refers to the optimum utilization of CIMB Group experience in order to widen the product and service portfolio and deepen expandable relationships with existing customers.
TREASURY &
Innovation, promotes a heavy focus on product innovation that gives added values to customers while optimizing the roles of alternate channels to improve business processes and services.
Optimization, creates a larger ‘wallet sharing’ through cross selling efforts; taking advantage of relationships long established with corporations, investment firms, and SOEs; expanding business through the optimization of branch offices and human resource management; and complying with the government’s regulations, policies and audit standards.
Adaptation, makes the necessary adjustments to work plans and strategies by becoming more responsive to those changes.
This strategy entails a focus on five key targets the first of which is to keep a focus on market making products/
transactions and hedging transactions. The second is to focus on how to generate larger fee-based income from both retail and corporate customers, domestic and overseas; the third focus is to accommodate and adapt to the business needs of other units but still through prevailing rules and regulations. The forth focus is to mitigate risks and improve operational systems and processes whether in business aspects or in control and monitoring. The fifth focus is to optimize the effectiveness of human resource management in order to align our potential to the Bank’s business and to keep developing skills and competence of Treasury staff.
2013 PERFORMANCE
In 2013 the Treasury Division demonstrated excellent performance posting revenue of Rp3,654 billion. The biggest contributor of this revenue was due to the net interest margin spread within the management of liquidity and the commercial paper portfolio ofRp2,984 billion (78.4%), followed by income from foreign exchange transactions that reached Rp655 billion (17.2%), and from commercial paper trading that reached Rp183 billion (5%).
Compared to that of 2012, income from foreign exchange and derivatives in 2013 suffered a significant decline although forex transaction
value of the Rupiah against the US Dollar. This decline was due the shrinking volume of derivative hedging in line with the slower growth of lending in the banking sector.
Meanwhile, a higher income from forex transactions was reached thanks to
joint KPI, intensive training for Treasury products for the marketing divisions of the
units of Consumer Banking, Commercial Banking, and Corporate Banking, and
cross selling transactions.
Treasury also carried out more intense activities in commercial paper
transactions, through both trading and market making efforts. The increase in interest rates and the impacts from the global economic policies have put pressures on
the price of commercial paper.
To mitigate risk, the commercial paper trading unit has conducted a re-profiling of existing commercial paper portfolios, besides, keeping up its role as a Primary dealer of the Government bonds and selling agent of retail ORI. This commercial paper trading is supported by an alliance with Consumer Banking, Private Banking, and Preferred.
In 2013, Treasury successfully expanded its Sharia Treasury business. The Profit Before Tax of Sharia Treasury increased 32% to Rp184 billion from the previous year’s figure. The Sharia Treasury unit also collaborates with other business units. Besides sharia product development such as Forex transactions (Tomorrow, Spot), Bank Notes
and SIKA, the Sharia Treasury has also been active in forex and commercial paper trading.
Treasury has also earned recognition for its service excellence from Asia Money Magazine. From Asia Risk Magazine, Treasury in November 2012 earned an award at the House of the Year 2013 Event for its outstanding performance in Derivatives Risk Management and Asset Liability Management.
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Asiroha Situmorang Vice President & Controller PT Freeport Indonesia
PT Freeport Indonesia and its thousands of employees have been CIMB Niaga’s customers since 1995. As one of our major banks, CIMB Niaga is professional, innovative, quick and always provides the best banking services. In addition, CIMB Niaga offers competitive rates.
We do get the assistance that we need and are satisfied with the way CIMB Niaga services us, including in our foreign exchange transactions, bank guarantees, and other services.
It is our hope that CIMB Niaga will continue its success and retain its leading position.
ASSET-LIABILITY MANAGEMENT
CIMB Niaga’s Loan to Deposit Ratio at 90.39% showed a decrease from the previous year’s 95%. Throughout 2013, the Bank was consistently pushing an effort to raise more funds to maintain liquidity in the future in order to anticipate an increasing interest rates, beginning to occur in the second semester of the year. Besides this, with the application of BI’s Liquidity Coverage Ratio measures effective early in the year, the Bank began to control its lending growth at a manageable level.
Meanwhile, to finance expansion in customer financing, especially in the mortgage and automotive sectors, in November 2013 the Bank issued senior bonds with a tenor of 3 – 5 years; thus generating proceeds of Rp1,450 billion.
2014 PROSPECTS
The Treasury and Capital Market unit will continue to expand business through the execution of its long-term strategy of integration, innovation, optimization, and adaptation, and make whatever adjustments deemed necessary. To achieve and maintain sustainable growth, Treasury relies on three main pillars, which are distribution channel, customer orientation, and system and infrastructure development.
Collaboration and cooperation with other business units will be strengthened, which is coupled with more extensive and intensive effort to unleash customer potential and prospects while further developing systems to support business expansion.