In 2017, Commercial Banking loans continued to grow selectively in the midst of tight competition and challenging economic conditions. Loan growth was focused on locations with good GDP and in sectors with strong potential, such as manufacturing, construction and agriculture. Loan growth was supported by strengthening organizational functions such as Business Credit Teams to improve the quality of loan proposals (underwriting) and Client Services related to loan
Commercial Banking continued to innovate in strengthening the CIMB Niaga brand among top rated debtor groups, by offering fast and precise solutions, comprehensive and integrated services, easy transactions, and strong customer relationships.
STRATEGIES AND POLICIES In 2017, Commercial Banking continued a recalibration process, which is a continuous process of innovation and improvement from 2016, through several initiatives implemented
In 2017, profit before tax of Commercial Banking increased to Rp399.7 billion. This achievement was supported by increased non-interest income of 210.4% to Rp225.4 billion, compared to Rp72.6 billion in the previous year.
Business Segment Review
Commercial Banking loans increased by 6.9% yoy to Rp31.9 trillion
6.9%
18.9%
1. Phase 1 is the strengthening and balancing stage that focuses on:
a. Improved loan processing.
b. Loan growth with considering loan quality on new loan bookings.
c. Strengthened loan monitoring & maintenance through Early Alert Tools & Stress Tests, Product
& AQ, and Portfolio Management System.
d. Reviewing focus and extent of Commercial Banking.
2. Phase 2 is the stabilizing and culture building phase that focuses on maintaining momentum on improving human capital performance and quality through the provision of continuous training and certification.
Implementation of the above strategies and policies resulted in several positive impacts including:
1. Operational risks improvement.
2. Improvement in asset quality.
3. Improvement in employee productivity.
PERFORMANCE IN 2017
In 2017, profit before tax of Commercial Banking increased to Rp399.7 billion, compared to a loss amounting to Rp166.1 billion in the previous year. This increase was supported by an increase in non-interest income (NoII) of 210.4% to Rp225.4 billion from the previous year’s Rp72.6 billion. Commercial Banking’s net interest income increased by Rp22.7 billion, or 2.0%, from Rp1.16 trillion in 2016 to Rp1.18 trillion in 2017. Operational expenses were well-managed
Net Interest Income (Rp billion)
1,179 1,156
1,234
17 16
15
Net Interest Margin (%)
3.5% 3.5%
3.9%
17 16
15
Non Interest Income (Rp billion)
91 73
225
17 16
15
COMMERCIAL BANKING
Loan Disbursement
Total commercial loans increased by Rp2.1 trillion, or 6.9%, to Rp31.9 trillion in 2017 from Rp29.8 trillion in 2016. This increase caused a higher contribution of Commercial Banking loans to total CIMB Niaga loans to rise to 17.2% in 2017 compared to 16.6% in 2016.
Working capital loans of Commercial Banking increased by Rp2.6 trillion, or 14.6%, to Rp20.7 trillion compared to 2016’s Rp18.1 trillion. Meanwhile, investment loans decreased by Rp0.6 trillion, or 5.0%, to Rp11.2 trillion from Rp11.8 trillion in 2016. This is in line with the CIMB Niaga strategy and focus on working capital loans.
Loan (Rp trillion)
61.4 % 31.3
60.6%
29.8 31.9
65.0%
38.6% 39.4% 35.0% Working Capital Loans
Investment Loans
17 16
15
* including account transfers
Loan Quality
In order to improve the quality of Commercial Banking loans, a recalibration process of several initiatives were undertaken:
1. Improved work processes, by establishing special units to support loan activities such as Commercial Centers, Client Services, Early Alerts, Portfolio Management and Asset Quality, where these units will focus on improving loan processes as well as integrated loan quality as a first line of defense.
2. Re-mapping focus and footprint, by identifying areas with growth potential and focusing on the largest industries in each region.
In 2017, the gross non-performing loans ratio stood at 8.2%. Other efforts by CIMB Niaga to improve loan quality included regular and continuous identification to avoid potential losses, and intensified cooperation with recovery unit to obtain the best solution.
Customer Deposits
In 2017, total customer deposits from Commercial Banking increased by 2.1% to Rp19.3 trillion from the same position in 2016 of Rp18.9 trillion. Meanwhile, LDR increased significantly by 165.3% in 2017 compared to 158.4% in 2016.
From total customer deposits, time deposits declined by Rp1.0 trillion, or 9.5%, to Rp9.9 trillion from Rp10.9 trillion in 2016, while CASA increased by 18.9%, or Rp1.5 trillion, to Rp9.4 trillion compared to Rp7.9 trillion in 2016. With the increase in CASA, Commercial Banking could offer more competitive pricing.
23.5
18.9 19.3
Customer Deposits (Rp trillion)
17 16
15
PLANS FOR 2018
Commercial Banking has formulated strategies and policies to be implemented in 2018. In order to respond to challenges and opportunities, Commercial Banking will:
1. Focus on areas and industries that have strong potential growth.
2. Increase cross-selling in line with customer needs 3. Increase TAT (turn around time) and speed of loan
processing.
4. Strengthen integrated first line of defense to maintain asset quality.
BUDI TIRTAWISATA CEO Panorama Group
I have had a personal account at Bank Niaga (at that time) since 1986, and since 2008, our business in tourism & hospitality established cooperation with CIMB Niaga for financing several of our hotel development projects.
In the past few years we have experienced excellent service improvement from all CIMB Niaga’s officers starting from the junior, middle, up to the senior management/Board of Directors level.
CIMB Niaga also has created conducive environment by paying attention and communicating well with us as customers. CIMB Niaga has become the bank with comprehensive understanding of our business and this is very positive.
We hope that CIMB Niaga continues to thrive by asserting employee professionalism as a major asset which is supported by the implementation of revolutionary technology.