Board of Directors
5) Leveraging of Information Technology and Digital Platforms
We prioritize the use of Information Technology in driving the Bank’s business to be at the forefront of digital banking. To this end, we continue to innovate and maximise the use of technology in the banking industry. The usage of digital platform remains our main focus to deliver the best customer experience and security in banking transactions.
In 2018, continuous improvement in the field of technology and digital platform were delivered in various initiatives such as Self Service Banking at Digital Lounge; Wealth Management System;
implementation of Neo Robotics (Nero) at Operation division; Robotic Process Automation (RPA) and QR Code in Go Mobile; Voice Interaction Analytic our Call Center. This is also supported by the upgrading of IT systems and infrastructures to support future growth and the dynamic business needs.
Performance Achievement of 2018
Highlights for CIMB Niaga’s financial position achieved in 2018, were as follows: Bank total assets were stable recorded at Rp266.8 trillion. Loan growth was cautious at 1.80% to Rp188.5 trillion from the previous year of Rp185.1 trillion. We also recorded significant improvements in asset quality with reduction of 64bps the non-performing loans (NPLs)-gross ratio to 3.11%. This was achieved with CIMB Niaga’s strategy on prudent Customer Selection and prioritizing asset quality, while continuously exploring credit recovery options.
On the liability side, CIMB Niaga recorded stable total customer deposits at Rp190.8 trillion, with CASA contributing Rp100.4 trillion. The primary driver of CASA is attributable to Saving which grew 8.53% to Rp54.5 trillion, from the previous year.
Report of the Board of Directors
In 2018, we recorded stable operating revenue at Rp15.8 trillion, given the soft economic environment.
Non-interest income was grew 13.84% to Rp3.8 trillion.
The growth in operating revenues was mainly driven from syndication fees, forex and fixed income and recovery which improved respectively by 112.10% and 30.01% compared to the previous year.
Improvement in Cost of Credit by 63bps to 1.63%
in 2018 translated into a consolidated Profit Before Tax of Rp4.8 trillion, increase of 16.8% from 2017. This represents net income attributable to shareholders of Rp3.5 trillion or 16.95% increase the year before. In line with the increase in net income, the Bank’s earnings per share also grew Rp21.2 from Rp118.5 per share. The Board hereby proposes to shareholders a dividend payment of 20% of the net income or Rp696.5 billion, to be approved in Annual General Meeting (AGM).
Achievements and Target
We managed to record an increase on our Bank’s performance in the midst of macroeconomic challenges. Profit before tax increased by 16.75% to Rp4.9 trillion and achieved the target that we have set before. The Bank’s ROE improved 75bps to 9.09% in 2018 as we target above to achieve double digit ROEs.
Our 2018 capital position is fundamentally stronger at Rp39.6 trillion, it is also reflected in Capital Adequacy Ratio (CAR) grew of 106bps to 19.66% and beyond the target that has been set.
Our Sharia business has grown in scale and market share, becoming the largest Sharia Business Unit in Indonesia and 5th largest Sharia bank.
We continue focus on our CASA franchise pushing for further growth to increase our competitive advantages and sustainable our profitability. We have made leaps of progress from being mid 40s CASA ratio Bank 3 years ago to chasing mid 50s CASA ratio going into 2019.
The Consumer Business led by Mortgage, Credit Card and Savings Accounts achievements highlighted above represents a key strategy for the Bank. As we continue to build volume and market share. This business supported by digital innovation is expected to grow from strength to strength.
The SME focus is another key strategy pillar, achieving customer acquisitions whilst maintaining asset quality.
This business achieved Rp29.6 trillion loan portfolio, is sizeable and scalable. The foundation has been set for the business to ride the growth of Indonesia new digital economy in the future.
The significant progress on asset quality with NPL improvement 64 bps and Cost of Credit improvement of 63 bps, this demonstrates of our determination to steer this Bank with conservative and prudent practices, whilst at the same time enhancing the return to Shareholders.
This achievement strengthens our 2018 fundamentals and prepares us for 2019 challenges and opportunities.
Anticipation of Challenges and Constraints
In 2018, the challenging macro environment and global uncertainty severely impacted the Rupiah currency, impacting the consumer consumption. The Government continued its infrastructure investment policy to drive economic growth. CIMB Niaga had to adjust its strategy to participate in Government Infrastructure Projects, given the slow growth of the retail demand. Financing for the Government Infrastructure Projects is dominated by the State Owned Banks and Capital Markets. As a result, CIMB Niaga’s loan growth grew at a slower pace compared to the banking industry in general.
Furthermore, another challenge in the banking industry in 2018 was the expansion of financial technology (Fintech). Fintech grew rapidly and being limitless to real industry players and also expands to trade and financial sectors, concurrent with a rapid development of the Industrial Revolution 4.0. As a leader in digital banking services, we will strive to meet this competition via efficient and effective innovation, and through collaboration with Fintech companies, both directly and indirectly. CIMB Niaga has a core technology platform and from this platform is able to offer new, better and more innovative products to enhance customers’ banking experience.
BUSINESS PROSPECTS
In 2019, macroeconomic conditions are expected to be remained challenging, and relatively similar to 2018 condition. Both external factors and domestic market conditions will have an effect on Indonesian economic growth. Due to global matters, Indonesia’s economic growth may stagnant because of continuance of the normalization of the Fed Fund Rate (FFR) expected in 2019. Also, an increase in oil prices influenced by geo- politics or tensions between the US and China on a trade war may also exaggerate the condition.
On the domestic side, investors are expected to wait and observe the political agenda resulting from the 2019 Presidential and Legislative Elections. Other challenges include a tightening of liquidity in the banking industry due to higher loan growth compared to the growth of banking deposits, as well as the trend of increase interest rates. It is also expected that the government’s discretion to slow down the expansion of fiscal policy will have an effect on Indonesia’s economic growth. However, we remain optimistic, that business opportunities for Bank are still abundant.
These opportunities and challenges will be cautiously monitored by CIMB Niaga to develop these business opportunities selectively and prudently.
As an effort to achieve sustainable business growth, we will carry out the Bank strategy and focus on asset quality as a top priority, whilst encouraging a prudent growth strategy.
We have targeted 2019 loan growth at around 5% - 8%. Further, we will develop partner collaborations to acquire new customers and execute strategies to increase e-commerce transactions and digital banking transactions. In the Sharia segment, we plan to further launch sharia-based products to complement our product suite, for example personal loan product. This is to expand sharia customer base and market share.
SUSTAINABLE FINANCIAL INITIATIVES
Related to implementation of POJK No. 51/POJK.03/2017 on Sustainable Financing for Financial Service Institutions, Issuers and Public Companies, CIMB Niaga had prepared a Sustainable Financial Action Plan (Finance Sustainability Report) in November 2018.
The Finance Sustainability Report has been evaluated and approved by the Board of Directors and the Board of Commissioners, and submitted to OJK.
CIMB Niaga’s Finance Sustainability Report contains Bank programs which will be implemented within 1 to 5 year timeframe. In the Finance Sustainability Report, CIMB Niaga explained several programs including sustainable financial product and service development programs, internal capacity development programs, organizational adjustment programs and sustainable CSR programs. Preparation of the Sustainability Finance Report was carried out by taking into account: the principles of responsible investment, the principles of strategy and sustainable business practices, principles of social and environmental risk management, governance principles, principles of informative communication, inclusive principles, the principle of developing priority sectors and the principles of coordination and collaboration.
Report of the Board of Directors
In the second semester of 2018, the Bank held workshops and training on Sustainable Finance by inviting IFC Indonesia, KLHK and Trisakti Sustainability Center as speakers in order to heightened awareness on Sustainable Financing. The Bank has formed a Sustainable Finance task force which is responsible on drafting CIMB Niaga’s Sustainability Finance Report.
LEADING DIGITAL BANKING SERVICES
We consistently emphasize the importance of adaption capability in the midst of rapid business and technology environments. Riding on the FORWARD brand promise, we have carried out information technology initiatives to expand our digital banking services with focus on branchless banking, improving the customer experience, building digital sales skills, and enhancing mobile banking capabilities. CIMB Niaga consistently upgrades the IT platform to develop various digital-based products and services.
In 2018, we continuously do innovation on digital banking to provide access for retail customer transactions, for example the recent update of the new Go Mobile features. These features include Quick Response codes (QR Code), which facilitate new financial transfers experience within New Go Mobile users and online shopping on many leading e-commerce retailers. Payments using QR is accessible at over 100 CIMB Niaga merchants. For non-retail customers, our award winning Bizchannel@CIMB is a market leader in the internet banking solution for banking transactions to its customers in the business segment.
The Bank’s effort in integrating technology within banking industry has strengthened its position as the leading digital bank in Indonesia; all these efforts bring a commitment of readiness on information and technology systems on every challenge in the future.
We hope that various digital banking services such as CIMB Clicks, Go Mobile, Rekening Ponsel, CIMB Niaga Phone Banking 14041, Automated Teller Machines (ATM), Electronic Data Capture (EDC), Cash Deposit Machines (CDM), Cash Recycle Machines (CRM), Digital Lounge and BizChannel@CIMB could continue to
HUMAN RESOURCES ASSETS MANAGEMENT
One of the key elements that create a successful CIMB Niaga is the management of Human Resources.
Through optimization of HR recruitment process;
competency development (education, training materials, and on the job training); cultural application and risk awareness; performance management and remuneration systems; and employee pre-retirement welfare. With the new era, generation of millennials growing rapidly within the Bank environment, we consistently tailor HR management and address all challenges in 4th Gen Industrial Era, along with its digital disruptions.
Focus and strategic plan in the HR field for 2018 focused on 4 main strategies including: Employer Branding, Digitalizing HR, Talent Based Rewards &
Development Review and Culture Building. These four strategies are expected to bring positive impact on the overall business development. We intensively and continuously carry out various initiatives to improve risk awareness and compliance culture through a variety of programs such as the “Bring ZAC (Zealous About Compliance) to Life” campaign, intensive communication through various media and risk &
compliance joint discussion.
Going forward, CIMB Niaga will continuously focus on increasing numbers of talent relate to Data, Digital and Disruption (3D) as a concrete step to address the changes and challenges of the 4th Industrial Revolution. We also initiate reskilling and upskilling for our employees and provide opportunities for those to improve their competencies in the midst of digital era transformation. With those efforts, we believe the Bank will develop professional, resilient and high integrity talents in order to address the challenges and achieve the Bank’s vision and mission.
CORPORATE GOVERNANCE
For us, Good Corporate Governance (GCG) implementation is the foundation for a business to maximize value added for stakeholders, as well as to maintain business continuity. The GCG development is aligned with current best practices in order to maximize the Bank value, to protect shareholders, and to treat every stakeholder fairly.
Implementation of GCG at CIMB Niaga refers to the four pillars of Corporate Governance, namely:
governance commitment, governance structure, governance process and governance outcomes.
These represent CIMB Niaga’s responsibilities to all stakeholders, including customers, employees, shareholders, government and the community. We also implemented GCG based guidelines on both national and international standards.
In line with rapid development of information technology, we consistently synergize both IT and Corporate Governance. In 2018, CIMB Niaga became the first public company in Indonesia to hold e-voting at the Annual General Meetings of Shareholders (AGM).
In recognition of our commitment on the implementation of GCG, CIMB Niaga has received appreciation from several independent reputable institutions, such as “Top 50 ASEAN” and “Top 3 Indonesia ASEAN Corporate Governance Awards 2018” from ASEAN Corporate Governance and ASEAN Capital Markets Forum and “Top 50 and The Best Overall 2018” for the category Massive Capitalization Public Companies in Indonesia from the Indonesian Institute for Corporate Directorship.
Report of the Board of Directors
CORPORATE SOCIAL RESPONSIBILITY
The implementation of the Bank’s social responsibility (CSR) is the foundation of CIMB Niaga’s contribution in the banking industry. CIMB Niaga’s CSR program is directed on activities that have significant impacts on public welfare based on four pillars of:
Education Development, Community Empowerment, Philanthropy and the Environment.
CIMB Niaga’s commitment to support sustainable finance has been gradually implemented in CSR activities through various programs such as, Ayo Menabung dan Berbagi, CIMB Niaga Scholarship, Community Link and Preservation and Conservation Bamboo activity. Going forward, the Bank intends to have more contribution in the implementation of sustainable finance.
During 2018, Rp34.2 billion of CSR contribution has been distributed by CIMB Niaga. Going forward CIMB Niaga plans to gradually allocate 1% of Profit Before Tax as a commitment for CSR activities. We optimistically believe the consistency of CSR activities supported with sustainable finance and will provide added value for all shareholder and stakeholders.
CHANGES IN THE COMPOSITION OF MEMBERS OF THE BOARD OF DIRECTORS
Based on the Extraordinary General Meeting of Shareholders (EGM) held on 19 December 2018, the EGM approved changes in the composition of the Board of Directors of CIMB Niaga. The EGM accepted the resignation of Wan Razly Abdullah from his position as Director effective from 1 January 2019. The EGM also agreed to appoint Lee Kai Kwong as Director of CIMB Niaga replacing Wan Razly Abdullah.
As of this Annual Report published, the composition of the Board of Directors of CIMB Niaga is as follows:
• Tigor M. Siahaan : President Director
• Rita Mas’Oen : Director
• Megawati Sutanto : Director
• Vera Handajani : Director
• John Simon : Director
• Lani Darmawan : Director
• Pandji P. Djajanegara : Director
• Hedy Lapian : Director
• Fransiska Oei : Compliance Director (Independent)
• Rahardja Alimhamzah : Director
• Lee Kai Kwong : Director*)
*) subject to regulatory approval
We express our gratitude and highest appreciation to Wan Razly Abdullah for the contributions he has made so that CIMB Niaga could become the second largest national private bank in Indonesia. We also congratulate Lee Kai Kwong on his on-boarding. Going forward, we believe the Board of Directors will provide the maximum contributions to improve the Bank’s performance in the future.
APPRECIATION
We, the Board of Directors, express our deepest gratitude and appreciation to the shareholders, business partners and all other stakeholders of CIMB Niaga. A deep appreciation is also conveyed specifically to the Board of Commissioners, related committees and all employees who continue to contribute with full dedication in supporting the CIMB Niaga’s business growth. We also express our gratitude to the community and all customers for all their support and trust that always encourages us to provide the best banking services to our customers.
Going forward, our initiative and spirit to transform this Bank into an Elite Indonesian Bank, we have announced our “Forward23 Semangat Perubahan”, which are based on five strategic pivots – Customer Centricity, Sustainability, Ventures & Partnerships, Technology & Data, and our People: Advancing Customers and Society.
15 March 2019
Tigor M. Siahaan President Director
Board of Directors
seated from left to right
standing form left to right Pandji P. Djajanegara
Syariah Banking Director Megawati Sutanto
Credit Director John Simon
Treasury & Capital Market Director Hedy Lapian
Human Resources Director
Report of the Sharia Supervisory Board
Bismillaahirrahmaanirrahim
Assalamu’alaikum wa rahmatullaahi wa barakatuh, Alhamdulillaahi rabbil ‘alamin, first of all let us praise the presence of Allah Subhanahu wa Ta’ala for the success, enjoyment, and ease that we are blessed with so that we can carry out our mandated duties and responsibilities. Not forgetting prayers and peace, may God continue to bestow grace on the Prophet Muhammad and his family and his companions.
Sharia Supervisory Board (DPS) Sharia Business Unit (UUS) CIMB Niaga has the main duty is to provide supervision and advice that can encourage the growth of the performance of CIMB Niaga Syariah Business Unit in compliance with Sharia principles. In addition, we also ensure that all aspects of the CIMB Niaga UUS business are carried in accordance with Sharia principles based on Fatwa of the National Sharia Council of the Indonesian Ulema Council (DSN-MUI). In carrying out the mandated duties and responsibilities, we collaborate with the management and all CIMB Niaga employees supported by CIMB Group.
In the 2018 fiscal year, DPS carried out its supervisory activities, including conducting periodic supervision of business units and reviewing approvals on product proposals, policies and procedures. DPS also dealt with other matters relating to compliance with Sharia principles in the form of DPS opinions.
Through this report, we can say that in 2018, in general, CIMB Niaga UUS has carried out sharia banking transaction activities in accordance with the provisions of the Authority/Regulator as stipulated in POJK/PBI and SEOJK/SEBI and Sharia provisions in the MUI DSN Fatwa and DPS opinion and the Bank’s Sharia Compliance Policy. Sharia banking transactions
include financing transactions, fund raising, services, and other product development and innovation initiatives.
We express our appreciation for the dedication and hard work of the management of CIMB Niaga and all employees for the success of recording remarkable growth in the CIMB Niaga UUS. The strategy of implementing the Dual Banking Leveraging Model (DBLM), including the “Sharia First” program delivered growth at CIMB Niaga UUS assets of 45.40%, or an increase of Rp 10.7 trillion from Rp 23.6 trillion in 2017 to Rp 34.4 trillion in 2018. Total financing distribution grew 58.80% or Rp. 9.8 trillion reaching Rp. 26.5 trillion from the previous year, with Non Performing Financing (NPF) being maintained at the level of 0.95%. Total customer deposits were recorded at Rp23.7 trillion, growing by 19.08% compared to the previous year’s Rp19.9 trillion.
This performance achievement was also marked by the achievement of a profit before tax (PBT) of Rp701.7 billion, grew 43.29% from Rp489.7 billion in the previous year.
DPS expresses its gratitude for the support of management and all employees in developing the CIMB Niaga UUS throughout 2018. We are optimistic with strong and sincere intentions, that by working together CIMB Niaga UUS will grow, to meet the needs of the Indonesian people in line with sharia principles. In addition, the DPS also encouraged the management of CIMB Niaga UUS to continue to work with enthusiasm and dedication to achieve the targets set for the coming year.
Finally, let us pray that Allah, Subhanahu wa Ta’ala, will always provide convenience and blessing for everything we do. Amen rabbal ‘aalamin.
Waassalamu’alaikum wa Rahmatullaahi wa Barakatuh,
On behalf of the Sharia Supervisory Board