in managing its businesses. Total financing portfolio increased by 63.6% while the NPF ratio decreased from 1.15% in 2016 to 0.91% in 2017.
Business Segment Review
Total Assets of Sharia Banking increased by 85.0% yoy to Rp23.6 trillion
85.0%
87.3%
3. To champion the business development and acceleration of the ASEAN integration agenda towards being a leading sharia bank, being the anchor for Indonesian banking development through continuous innovations, quality services and best practices.
4. To be a leading sharia bank providing the best digital banking services in the industry.
OBJECTIVES, STRATEGIES, AND POLICIES ON SHARIA BANKING DEVELOPMENT
Short Term
Our short-term targets, strategy and policies are formulated to strengthen work culture as the groundwork to support sustainable business growth by means of the following:
1. Implementing the Dual Banking Leverage Model (DBLM) across business units and support functions.
2. Increasing sharia banking’s share of the Banking book across business segments by implementing a solid and integrated KPI with attractive rewards.
3. Undertaking sharia banking education and training on a continuous and regular basis.
4. Improving understanding of Syariah First on a bankwide basis.
5. Accelerating new product launches and new feature developments to improve customer experience.
6. Improving efficiencies through a better synergy with other units in CIMB Niaga and its affiliates.
Medium Term
In the medium term, CIMB Niaga Syariah focuses on becoming one of Indonesia’s leading sharia banking players by means of the following:
1. Increasing its business size to 15% that of CIMB Niaga.
2. Continuously developing human resources with sharia banking being one of the core competences for all staffs.
3. Improving effectiveness of the Dual Banking Leverage Model implementation across all lines.
4. Exploring more diverse and stable funding sources to support CIMB Niaga Syariah’s growth plan.
5. Increasing cross-sell of sharia products across all business units.
6. Establishing a solid foundation to support its spin- off plan from CIMB Niaga.
Long Term
In the long-term, CIMB Niaga Syariah focuses on its spin-off preparation from CIMB Niaga to become a separated entity as regulated by OJK by means of the following:
1. Prepare a solid sharia banking framework based on Strategic Business Unit (SBU) as the key pillar.
2. Develop a sharia business platform through the DBLM implementation with each SBU functioning to coordinate its daily operations with CIMB Niaga Syariah in order to achieve the desired level of efficiency and to improve risk management quality.
3. Increase its share of the book at CIMB Niaga to 20%
by 2023.
ASSET GROWTH
In 2017, CIMB Niaga Syariah recorded asset growth of 85.0% yoy, representing an increase of Rp10.9 trillion to Rp23.6 trillion, from Rp12.8 trillion in 2016. Asset growth was largely attributed to the 63.6% increase in the financing portfolio, making up 70.6% of total assets. This performance has further strengthened CIMB Niaga Syariah’s foothold as one of the leading sharia business units in Indonesia.
FINANCING
The total financing portfolio by end of 2017 grew 63.6%, from Rp10.2 trillion in 2016 to Rp16.7 trillion in 2017. The highest growth stemmed from the Corporate segment which increased 77.1% or Rp2.6 trillion yoy. The next highest growth contributor was the Consumer segment, which rose by 48.9% or Rp2.4 trillion compared to 2016.
The Commercial and MSME segment also recorded significant increase, with the Commercial segment increasing 88.8%, or Rp1.1 trillion yoy meanwhile the MSME segment showed an increase of 57.0% or Rp445 billion yoy.
Sharia Financing by Segment
Sharia Financing
Rp billion 2015 2016 2017 Growth (%) 2015-2016 2016-2017
Corporate 1,643 3,360 5,949 104.5% 77.1%
Commercial 1,135 1,218 2,299 7.3% 88.8%
MSME 754 781 1,226 3.6% 57.0%
Consumer 3,752 4,847 7,221 29.2% 48.9%
Total 7,284 10,206 16,695 40.1% 63.6%
SHARIA BANKING
CUSTOMER DEPOSITS
In 2017, the total customer deposits increased by 87.3%
to Rp19.9 trillion compared to 2016’s total of Rp10.6 trillion. This growth mostly resulted from growth of funds from time deposits by 147.3% yoy.
The increase in customer deposits was driven by growth in all segments. The largest volume growth was the Corporate segment that recorded an increase of Rp3.8 trillion, or 351.8% yoy, followed by the Consumer segment deposits that increased 54.5%, or Rp3.6 trillion yoy. The MSME funding also increased of Rp1.7 trillion or 88.4% yoy. Meanwhile, the Commercial segment was relatively stable with an increase of Rp204 billion or 18.8% yoy.
Sharia Customer Deposits by Segment
Sharia Customer Deposit
Rp billion 2015 2016 2017 Growth (%) 2015-2016 2016-2017
Corporate 543 1,083 4,893 99.4% 351.8%
Commercial 634 1,088 1,292 71.5% 18.8%
MSME 1,907 1,933 3,641 1.3% 88.4%
Consumer 4,500 6,525 10,082 45.0% 54.5%
Total 7,585 10,629 19,908 40.1% 87.3%
NON PERFORMING FINANCING AND CONTINUOUS IMPROVEMENT
In the course of 2017, CIMB Niaga Syariah focused on a more prudent policy in managing its businesses.
While total financing volume recorded a significant increase of 63.6%, the gross Non-Performing Financing (NPF) ratio declined from 1.15% in 2016 to 0.91% in 2017. In maintaining its assets quality, CIMB Niaga Syariah has strengthened cooperation with the Asset Restructuring and Recovery (ARR) team by managing non-performing financing (NPF) portfolios and marginal accounts.
IBU ESTHER REFINA SIAHAAN Finance Director
PT Gapura Angkasa
As the leading airport service company, PT Gapura Angkasa (Gapura) commits to provide the best services to customers as well as to stakeholders in an effort to improve Company performance.
The success of Gapura this year was largely contributed by customer trust, as well as enormous support from the stakeholders, particularly CIMB Niaga Syariah for providing financing facilities for our operational equipment procurement.
Sharia-based corporate financing is provided through the Ijarah Mutahiya Bi Tamlik contract (Corporate Leasing iB), and is recorded as Off- Balance Sheet financing during the financing tenor.
We are positive that this scheme will be able to be one of the financing alternatives for others, due to its uniqueness that is exclusively provided by sharia-based banking.
We choose CIMB Niaga as our main banking partner for their capabilities to provide a one-stop solution for various financing needs.
Hopefully, the cooperation and partnership that has been going well between the two institutions could continue and further improved in the future.
Thank you
In addition to managing business growth with a more prudent policy, CIMB Niaga Syariah also focused on business process improvements. These, among other means, included the development of Syariah Acceptance Criteria (SAC) tools to simplify business review process according to sharia principles. This tool is also used to assist reviewing process of all products and scheme to sharia principles. Overall, SAC tool greatly improves business processes and further enables business units to conduct a self-review of sharia compliance with products offered to customers.
This improvement is effective in accelerating and facilitating sharia business operations, as well as to improve overall business adherence to sharia principles.
Another improvement was the implementation of effective and efficient cost management, applied as part of the daily work culture. This has, among other means, been executed through the rationalization and collocation of 11 branches. CIMB Niaga Syariah has also optimized its Office Channelling for sharia product distribution. In addition, efficiency improvement was also made from the support optimization of information systems technology.
CIMB Niaga Syariah consistently strives to improve the product and service quality in order to build and enhance the customer experience, all towards sustaining customer loyalty. Service improvements are conducted in accordance with brand promise
“Forward” for operational activities, touch points, and product benefits. CIMB Niaga Syariah also created continuous added value in order to strengthen and enhance the customers’ heart share in the long run.
SHARIA BANKING INCOME 2017
CIMB Niaga Syariah recorded a Profit Before Tax of Rp489.7 billion in 2017, increased by 60.3% or Rp184.2 billion, compared to Rp305.4 billion in 2016.
The increased Profit Before Tax resulted from a combination of higher Operating Income and effective cost management.
OFFICES AND DISTRIBUTION NETWORK
To facilitate customer access to its sharia products and services, CIMB Niaga Syariah optimized its branch distribution network, including sharia main branches and office channelling at conventional branches (OC).
By the end of 2017, CIMB Niaga Syariah had 24 main branches, 1 cash office, 2 payment points and 460 OCs.
In addition, customer access is also supported through CIMB Niaga’s branchless banking services, including ATM, MFD, CDM, CIMB Clicks, Go Mobile, Preferred Phone Banking, Digital Lounge, and Rekening Ponsel choices. All these facilities demonstrate CIMB Niaga Syariah’s commitment to provide ease and convenience to customers in performing financial transactions.
These all have provided CIMB Niaga Syariah with the best digital sharia banking facilities in the industry.
HUMAN RESOURCES DEVELOPMENT
In support of building up sharia banking awareness in society, CIMB Niaga Syariah is committed to developing quality human resources in CIMB Niaga as catalyst or development agent. This commitment is demonstrated through undertaking sharia banking education and training to all CIMB Niaga employees.
During 2017, CIMB Niaga Syariah has developed sharia banking training modules and programs as well as certifications through e-learning. By the end of 2017, CIMB Niaga Syariah had 22 sharia banking training programs for business units and support units in CIMB Niaga, 32 development programs for CIMB Niaga Syariah staff, and 18 business learning sessions attended by 2,399 participants. CIMB Niaga Syariah also arranged a Sharia Banking certification program for 17,411 CIMB Niaga staff.
SHARIA BANKING
Continuing from prior years, DBLM implementation in 2017 was carried out to maintain and further improve all units support of sharia business growth. In the long term, CIMB Niaga Syariah leverages the DBLM as part of the corporate work culture. Therefore, the successful implementation of the DBLM requires both adequate quality and quantity of human resources in sharia banking.
COMPLIANCE AND IMPLEMENTATION OF SHARIA GOVERNANCE FRAMEWORK
CIMB Niaga Syariah has consistently supervised the implementation of sharia principles through the Sharia Supervisory Board (DPS), as executed by the Syariah Advisory Group as its lengthened arm. The DPS is actively involved in overseeing sharia compliance through reviews in order to ensure adherence to the fatwa regulations from the National Sharia Board.
Apart from the Syariah Advisory Group, these controlling activities are also supported by a Risk Control Unit. The Syariah Advisory Board assists the DPS in performing reviews related to adherence to sharia principles and provides input on product and transaction related issues, whereas the Risk Control Unit supports DPS in performing reviews related to sharia compliance within the Bank. Furthermore, CIMB Niaga Syariah has Common Sharia Compliance Policy and Standard Operating Procedures (SOP) that set guidelines for operating units, to ensure adherence to sharia principles.
AWARDS
A variety of performance achievements in the course of 2017 has given positive results to CIMB Niaga Syariah’s corporate image as reflected in the following awards:
1. Islamic Finance Award (KARIM Award 2017) as
“The Most Expanding Financing UUS with Assets
> Rp1.5 Trillion.
2. Infobank Sharia Finance Awards 2017 with an
“Excellent” ranking in the UUS Commercial Banks with Assets > Rp5 Trillion.
3. Baznas Award 2017.
4. Indonesia Sharia Finance Awards (ISFA) 2017 from Warta Ekonomi as “The Best Digital Sharia Unit Bank”.
5. Silaknas IAEI 2017 “Best Syariah Bank in UUS Category.
6. Indonesia Banking Awards 2017 “The Best Sharia Business Unit”.
7. Anugerah Syariah Republika 2017 as “Sharia Bank with Best Performance and Innovations”.
REALIZATION AND METHOD OF PROFIT SHARING In accordance to sharia principles, the distribution of profit sharing to third-party funding customers is calculated based on a predetermined and agreed nisbah (profit sharing portion) at the time of signing the fund placement agreement. To uphold the transparency and measurability principles, CIMB Niaga Syariah uses the calculation formula and policies set out in the internal profit sharing standard operating procedure. On a monthly basis, CIMB Niaga Syariah issues an internal memo regarding the Bank’s income, calculated in a percentage, to be used as the basis for profit sharing distribution. The memo also contains the information on the nisbah for the following month.
The profit sharing realization for 2017 of CIMB Niaga Syariah is as follows:
GYD Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 IDR 8.771% 9.907% 8.812% 8.820% 9.089% 9.292% 9.470% 9.199% 9.112% 8.809% 8.260% 8.634%
USD 4.725% 5.326% 5.637% 4.839% 3.896% 5.667% 4.783% 4.961% 4.764% 4.444% 3.799% 4.899%
2018 PLANS, FOCUS AND STRATEGY
CIMB Niaga Syariah is confident of sharia banking industry growth in the future. Considering that sharia banking in Indonesia is barely breaking into the
“growth phase”, CIMB Niaga Syariah believes that with adequate resources, incentives and support, the sharia banking industry will grow even more rapidly in the upcoming years.
With such optimism, for 2018 CIMB Niaga will emphasize an optimistic business growth projection, controlled by prudent banking policy in managing its businesses. As a sharia-compliant financial intermediary, CIMB Niaga Syariah will focus on strengthening risk management, adhering to the applicable regulations and implementing good corporate governance principles.
Funding acquisition activities will be focused to ensure that the ever-challenging financing growth will be properly supported with adequate funding. CIMB Niaga Syariah will explore wider alternative funding sources, yet the main focus is still to acquire low-cost funds, CASA deposits. CASA acquisition activities will include, but will not be limited to, the development of new products and strengthening CASA promotion activities. Optimization of branchless banking services is also expected to strengthen CIMB Niaga Syariah’s foothold as the leading digital banking provider within the sharia banking industry. This strategy is also expected to improve CIMB Niaga Syariah’s operational efficiency.
CIMB Niaga Syariah is also committed to improve hajj service and facilities. In 2018, CIMB Niaga Syariah is planning to broaden the hajj service more extensively by intensifying partnership with BPKH (Badan Pengelola Keuangan Haji - Hajj Fund Management Agency) as well as other related organizations.
To achieve better business liquidity, CIMB Niaga Syariah will explore different funding sources and instruments, especially to cover long-term funding requirements. This action is conducted to strengthen long term business growth as well as mitigate the liquidity risk.
CIMB Niaga Syariah is also inspired to further strengthen credit risk management by implementing the Dual Banking Leverage Model within the credit risk management unit. Financing will be diversified to prudently selected customers according to CIMB Niaga’s overall risk appetite. To accelerate business growth and generate steady income, financing growth will be heavily supported by disbursement to non-retail segments which will be prioritized toward government projects. Nevertheless, CIMB Niaga Syariah also aspires to be the leader in the retail financing business, to be supported by new product development in the mentioned target.
To strengthen sharia business growth, CIMB Niaga Syariah will also ensure sharia products and services are aligned to those of conventional, to further promote sharia products better to the general public
SHARIA BANKING
and increase public exposure to and understanding of sharia banking products. Non-margin income generation activities will also be further enhanced.
Cross-selling activities for sharia products will be promoted across all units and be considered as part of the daily working culture. CIMB Niaga Syariah will also explore the treasury and trade finance business further by providing new related products, including preparing the business process to ensure proper risk management.
The implementation of strategies stated above will be closely-affected by support and involvement from all units and parties in CIMB Niaga. Learning from Syariah First implementation in the previous year, all units in CIMB Niaga are encouraged to continue living the spirit of Syariah First and bring this within the day-to-day working culture. With the finalization of DBLM policy, hopefully the “Syariah First” spirit can be implemented even better across all units in CIMB Niaga.
CIMB Niaga was able to show improvement in its financial performance in 2017, supported by national economic growth.
CIMB Niaga recorded a 10.2%
growth in assets, reaching Rp266.3 trillion, supported by a 2.8% loan growth, reaching Rp185.1 trillion, with Third Party Funds of Rp189.3 trillion showing an increase of 4.8%. In addition, net profit grew by 43.0%
reaching Rp3.0 trillion, mainly due to the increase in lending activities. These achievements show that CIMB Niaga is able
the midst of challenges in the local and global economies.
The following is a more detailed explanation, analysis and overview of CIMB Niaga’s 2017 financial performance.
The financial information is taken from the consolidated financial statements of PT Bank CIMB Niaga Tbk and Subsidiary as of 31 December 2017 and for the year then ended, which were prepared by Bank CIMB Niaga’s management in accordance with Financial Accounting Standards