ĀċĉŌ
The total non performing loans declined 0.8% to Rp1,463 billion in 2013
ĈċĉŌ
Trade Finance Transaction increased 7.8% to USD5,242.7 in 2013
36%
Fee based income increased 36% to Rp162 billion in 2013
We also made changes of focus in targeted industries by becoming less concentrated on financing in the coal, palm oil, and property sectors and have become more focused on other industries. This effort was done to keep corporate Banking from heavy reliance on just a few industries.
Credit Distribution
Corporate Banking experienced rather insignificant growth in financing compared to a year earlier. By the end of 2013, financing was recorded at Rp42,280 billion, 34% of which was distributed as working capital and the remaining 66%
was for investments.
Faced with an upward movement of the BI benchmark rate that was worsened by the uneven recovery from the global financial crisis, CIMB Niaga management felt the necessity to be extra prudent and selective with regards to credit expansion. On the other hand, 2013 was a year when credit expansion had to be controlled to prevent more severe impacts of the macro economy that stemmed from a trade deficit.
Despite lower asset growth, the Bank was able to maintain the quality of financing distributed. Corporate Banking non performing loans were recorded at 3.3% during the Q4 of 2013. Corporate Banking has also strived to increase its capability in managing risks that tend to show an increasing level of uncertainty be it credit risk, market risk, or liquidity risk through stress tests conducted on those certain accounts more likely to be exposed to risks emerging in a slower economic growth, interest rate increases, and the depreciation of the value of the Rupiah. As a result, Corporate Banking managed to reduce the amount of its non performing loans by 7.5% compared to what it had in 2012.
Description 2011 2012 2013
NPL (Rp billion) 1,431 1,435 1,463
Impaired (Rp billion) 2,570 1,956 2,700
Loan (excl. Syariah) (Rp billion) 39,124 42,564 43,280
NPL Ratio (%) 3.7% 3.4% 3.4%
Impaired Ratio (%) 6.6% 4.6% 6.2%
Syndication Loans
CIMB Niaga is one of the most active banks to engage in syndicated loans in Indonesia, especially during the last five years.
Customers enjoying syndicated loans in 2013 were those engaged in the mining, energy, and agribusiness sectors.
During the year, CIMB Niaga acted also as the arranger of 3 (three) syndicated loans that all combined amounted to USD640 million. This has placed CIMB Niaga as one of the most active banks with a 2% market share. Significant financing transactions included a syndicated loan in the amount of USD470 million given to PT Agro Multi Persada under which contract CIMB Niaga was appointed as the mandated lead arranger and bookrunner.
Fund Raising
Corporate Banking plays an active role to raise customer funds, which ranges from that of corporate customers, State Owned Enterprises, and non-bank financial institutions such as Securities, Pension Funds, Insurance companies, multi finance companies, and Fund Managers. The key focus is to increase low cost funds (checking account) by providing customers with banking transaction services through a variety of cash management services such as e-tax, e-chain, cargoLink, payroll, billpayment, transfer, investor account through the CIMB@Bizchannel with supports from cross selling effort in Forex, Trade Finance, Value Chain, and merchant and e-Commerce transactions.
To reach this objective, implemented were strategy coordination in Wholesale Banking Funding, industrial organization structure adjustment, knowledge improvement to understand customers better for better solutions, and disciplined enforcement in the sales process and tracking, tiering clients, and coordination in pipeline management.
In addition, to improve relationships with customers, Corporate Banking carried out a number of activities to give added value to its customers through Round Table Meetings by Industry, Client Gathering Appreciation Programs, the Signing Ceremony for Cash Management, Business Prospect & Economic Outlook Seminars and training for Forex (Trade Finance) for customers who may need them.
By the end of 2013, total funds raised in Corporate Banking reached Rp28.9 trillion comprising demand deposits and checking accounts, where the latter showed an increasing share of 37.7%.
Financial Institutions
The Financial Institution Unit serves as a corridor for cooperation with other financial institutions both domestic and overseas as an effort to expand business. Cooperation established in 2013 proved effective to increase transactions in cash management, trade finance, remittance, financing needs, and capital market activities.
This business focus was also done by building synergy with product managers and branches within the CIMB Niaga and CIMB group. This can expand and increase transactions in Cash Management, Trade Finance, Remittance, financing needs, and activities in the capital market. A number of partnerships in 2013 were able to increase transactions in Cash Management, Trade Finance, Remittance, financing needs, and activities in the capital market. These included strategies one of which was for partnerships with product managers and branches within the Company and CIMB Group.
Securities Services
Securities Services is one unit of Corporate Banking that generates fee-based income. Banking services offered by this unit relates to customers activities at the Capital Market, including services in custodian bank, trustees, agency, and settlement or payment bank.
Custodian Bank
As a custodian bank, the Company has established a strong reputation and is experienced for more than 20 years.
Products offered through this service include discretionary funds, Reksa Dana Funds, Unit Link, mandatory deposits for insurance fund, retail obligations, and cross border investment products.
Currently, assets managed and administered by CIMB Niaga Custodian Bank are those traded on the Indonesian Stock Exchange and Global Stock Exchanges by Investment Managers, Insurance Companies, Securities, Pension Fund, Foundations, and local and global financial institutions and government bodies.
Trustee
As a Trustee, the Company has experience of more than 20 years. The Company has been the Trustee for more than 154 bond issuances in Indonesia. There are currently 46 outstanding bond issuances with Rp43.1 trillion.
As agent, the Company offers agency services with regards to activities at the capital market such as monitoring agent, payment agent, conversion agent, guarantee agent, and escrow agent. Related to credit facilities, services offered include facility agent, escrow agent, and guarantee agent.
The Company also plays an active role in the Indonesian Trustee Association and the Indonesian Stock Exchange. By the amount of assets under management, the Company’s Trustee ranks 3rd in Indonesia.
Settlement Bank
Since the zero account system was first applied for transaction settlements at the Indonesian Stock Exchange by the Indonesian Stock Custodian Central, the Company has been trusted to act as a settlement bank for four consecutive periods with the period of 2011-2015 as the most recent appointment. This trust reflects the quality of service and the Company’s readiness and performance in handling stock transaction settlement to support securities, custodian banks, and Self Regulatory Organization (SRO) at the Indonesian Stock Exchange.
For the last five years, since 2009, the Company has been the biggest settlement bank for Indonesian Central Securities Depository (KSEI) by transaction amount. The Company handled 138,292 transactions amounting to Rp2,915 trillion, representing 45% of the total value of transactions at KSEI for the year.
To follow up the implementation of funds separation agreed by KSEI and all functioning settlement banks on 1 February 2012, the Company established partnerships with securities firms to open bank accounts at CIMB Niaga. Up to the end of 2013, the Company has entered into agreements in Investor Account Contracts with 61 securities firms.
Some of the comprehensive services the Bank offers to the capital market, be they investors, securities firms, or SRO, include an access to Host-to-Host through Gateway@
CIMB and the BizChannel@CIMB internet banking. These all reflect the Company’s eagerness to provide services to the Indonesian Capital Market.
2014 Prospects
With an estimated economic growth range of 6.1% - 6.2%
in 2014, Corporate Banking still sees an enormous potential of financing given the sizes of industries by which our financing is expected. Therefore, Corporate Banking will continue its efforts to expand credit with stronger portfolio diversification successfully established this year, despite global uncertainties and the near term general election throughout which businesses are projected to slow down and new investments emerge.
The selection of the right industries with great focus on industries to be targeted will make us better understand such industries including their inherent risks. In addition, Corporate Banking will be more selective in financing distribution by prioritizing companies that are managed with sound and transparent good corporate governance.
Key challenges are expected to emerge in the human resources, credit portfolio risk, banking regulation, and certainly the more intense competition due to the growing number of banks tapping into this industry. The presence of more foreign banks will also add to the number of competitor banks. In response to this, Corporate Banking – enforcing the theme ASEAN for You upheld by CIMB Group - will continue to improve its services through more product innovations and by taking advantage of CIMB Group’s wide networking in south east Asia and by encouraging more cross border and cross selling transactions. To support these initiatives, Corporate Banking will improve performance in internal process, organization, and human resources aspects and continue to maintain the quality credit and keep credit risks within its credit profile well controlled.
Mochtar Riady
Founder/Chairman Lippo Group
The Company has become of the role model bank in Indonesia. Cooperation between Lippo Group and CIMB Niaga has been built from tens of years ago. This has been made possible thanks to professional services CIMB Niaga offers.
Product innovations and excellent banking services have made CIMB Niaga the bank of choice for companies within Lippo Group. CIMB Niaga serves more than what a normal bank usually offers.
In the future, we believe that CIMB Niaga will perform even better and become the best bank in the Indonesian banking world. Becoming the bank of choice for business people like us.
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.