Business and Operations Report
Business Performance
In 2013, CIMB Niaga Syariah’s income net profit sharing increased by Rp129 billion or 30% toRp552 billion. This increase in operational income was pushed by an increase of Rp237 billion in revenue from financing distribution (before profit sharing distribution) or 36% to Rp901 billion, and an increase of Rp5 billion in fee based income, or 188%, to Rp14 billion. Meanwhile, operational expenses were managed more effectively and showed an increase of only 28% or Rp77 billion to Rp353 billion. Hence, CIMB Niaga Syariah’s profit before tax reached Rp179 billion or increasing 30% from Rp138 billion a year earlier.
CIMB Niaga Syariah’s total assets expanded 9% or by Rp789 billion from Rp9.07 trillion in 2012 to Rp9.86 trillion.
The increase in assets came partly from growth in saving accounts and demand deposits, commercial paper, and placements at BI.
Checking accounts grew Rp103 billion or 31% from Rp328 billion in 2012 to Rp431 billion in 2013. Meanwhile, savings accounts increased by Rp470 billion or 33% from Rp1.44 trillion in 2012 to Rp1.91 trillion in 2013. Demand deposit accounts experienced a decline of 21% or by Rp1.09 trillion from Rp5.23 trillion in 2012 to Rp4.13 trillion. This was due to weaker financing that needed some adjustment in high cost management. Therefore, the CASA ratio increased from 25% in 2012 to 36% in 2013. At the same time the customer base of saving products increased 20% to 598,794 customers by December 2013.
The customer base growth was also seen in financing products as the number of customers increased to 134,056.
Meanwhile, outstanding financing at CIMB Niaga Syariah in 2013 was Rp6.63 trillion or 13% up compared to the comparable period in 2012.
Factors that weakened growth in 2013 included:
• Settlements made by some segments or in some products that were higher than new financing.
• The implementation of Loan to Value Policy issued by Bank Indonesia to apply the same down payment percentage to sharia financing as that to conventional financing, which resulted in a significant decline in financing portfolio of mortgages and auto loans.
• Prudence and Pricing, as the implementation of SEBI no.15/40/ DKMP on the implementation of risk management at Banks that provide financing/credit to customers for secured property and auto loans and improvements in the implementation of prudential principles have weakened customer capability to afford mortgages or auto loans. With regards to financing, increases in the BI rate have decreased net margins as the cost of funds increased. To reduce cost of funds, the Bank needs to enlarge the portion of low cost funds in addition to making some re-pricing in financing.
However re-pricing carries the potential to reduce the financing portfolio.
• Improvements in IT or the automation of financing into loan originating system and Retail Credit System also reduced the financing portfolio.
Dudy Supriyadi
Director of PT Kertabumi Teknindo
Our company is engaged in Genset power rental whether Diesel or Gas Engines. We are currently enjoying an iB financing facility from CIMB Niaga Syariah for procurement of generator sets and other supporting devices.
Thanks to CIMB Niaga’s assistance we have managed to secure the availability of generator sets. We can deliver on time services to our customers, allowing our company to grow and expand. Now we rent out generator sets in various locations throughout the nation.
One of many other features of CIMB Niaga iB investasi is that it gives us a certainty with regards to our agreed tenor without being impacted by potential economic tension.
We hope that we expand this collaboration in more years to come.
Gross Non Performing Financing of Gross NPF in 2013 was 3.6% while Net NPF was 2.58%.
In view of business operations, CIMB Niaga Syariah saw some improvements. REO (Operational Efficiency Ratio) improved from 65.2% in 2012 to 64.5% in 2013.
Meanwhile, Cost to Income Ratio (CIR) also improved from 35.2% in 2012 to 34.5% in 2013. This indicates that sharia business operations have become more efficient compared to 2012.
Product and Service Development
CIMB Niaga Syariah’s performance in 2013 was supported by efforts to expand business including products and services. Continuing what was focused on in the previous years, products and services were developed by applying the concept of Dual Banking Leverage Model (DBLM). This model has been intended to help CIMB Niaga meet society’s expectations through comprehensive sharia product and service offerings that are just about equal in quality to those of CIMB Niaga’s conventional and even better than average of the Islamic banking industry.
By availability, CIMB Niaga has 53 offerings all together including 12 Sharia savings products, 10 sharia financing products, 7 financing models, 8 card products and services and business merchants, 9 Transaction Banking and Trade Finance products, and 7 Sharia-based Treasury Services. The number of products and services available in 2012 increased 16% following the introductions of 7 new products and services.
Besides, CIMB Niaga Syariah is also fully supported by the Company’s Branchless Banking such as ATM, SST, CDM, CIMB Clicks, Go Mobile, Preferred Phone Banking and Rekening Ponsel with features that are equal in quality to its parent entity and better than the industry.
In November 2013, the Company through it sharia business unit earned the trust the trust from the Ministry of Religious Affairs of the Republic of Indonesia as it was selected to manage the haj fund with 16 other banks. All the 17 banks were selected from 35 sharia banks and commercial banks through a very tight selection and evaluation process, all of which comprise 6 sharia banks, 3 sharia business units, and 8 sharia business units of Regional Development Banks (BPD). In the same month, the Company through its sharia business units was authorized to receive wakaf funds. These two key assignments are expected to add to the Company’s product and service portfolio and meet
Sharia Compliance
At CIMB Niaga Syariah, compliance with Sharia principles is important in all banking activities. In upholding Sharia compliance, Sharia supervision is managed by Sharia Supervisory Board (DPS) which is assisted by CIMB Niaga’s Internal Audit function, Compliance Group and Sharia Advisory Group within the Sharia Business Unit. This mechanism is expected to help secure optimum Sharia compliance in all CIMB Niaga Syaria’s business activities.
To ensure sharia compliance, CIMB Niaga has selected and appointed three national leaders and Sharia economists as its Sharia Supervisory Board members. They are Prof. Dr.
M. Quraish Shihab, MA; Prof. Dr. Fathurrahman Djamil, MA, and M. Taufik Ridlo, Lc, Dipl. EC.
Throughout 2013, the sharia compliance process ranged from product development, Sharia Supervisory Board monthly meetings to compliance review of financing activities to sharia principles, the Bank’s financing and banking services in some sharia branches. In addition, Internal Audit conducted reviews on sharia branches in terms of their sharia compliance.
The SSB reporting was prepared in adherence to applicable standards and submitted to Bank Indonesia once in every semester while the GCG Syariah self-assessment was performed twice in the year with the results prepared in reports and submitted to Bank Indonesia once in the year as compliance to regulation.
Network Expansion
Other efforts in business development are conducted through CIMB Niaga Syariah’s network expansion to broaden public access to Sharia banking products and services. This expansion included Sharia Branch Offices (KCS) and conventional branch offices at which Sharia services are also available (Office Channeling or OC) and rahn service outlets.
The number of KCS increased from 26 in 2011 to 29 KCS and 1 KCPS in 2013 in 18 provinces and 23 cities, which are Nanggroe Aceh Darussalam, North Sumatra, South Sumatra, West Sumatra, Riau, Jambi, Lampung, Jakarta, Banten , West Java, Central Java, Yogyakarta, East Java, South Sulawesi, East Kalimantan, South Kalimantan, West Nusa Tenggara and Bali.
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In 2013, a total of 29 new OC offices were opened in Jakarta, Bali, Nusa Tenggara, Kepri and Medan. Meanwhile 24 OC offices were closed due to closing and status downgrading of some conventional branches. Therefore, compared to 2012, the OC network increased 0.9% from 532 to 537 offices spread across 18 province and 95 cities in Indonesia.
Sharia services are also available at the Company’s various networks such as the Mikro Laju Outlets that offer financing products Gadai Emas iB X-Tra and Gadai Emas iB Preferred, SME branches, Mortgage Center offerings also KPR Syariah, and Auto Centers offering also KPM syariah.
Meanwhile, there are 99 SME network offices that also offer sharia financing. Sharia services are also available at 45 Mortgage Centers, 20 Auto Centers, and 51 CIMB Preferred. Gold pawn financing outlets increased 11.24%
or by 10 more outlets from 89 to 99 outlets.
In addition, CIMB Niaga Syariah was fully supported by Branchless Banking CIMB Niaga, including ATM, SST, CDM, CIMB Clicks, Go Mobile, Preferred Phone Banking and Rekening Ponsel.
Human Resources
To optimize its business performance, CIMB Niaga Syariah made human resource as one of its key focuses in 2013.
In order to improve human resource competence, CIMB Niaga Syariah cooperated with the Company’s Unit Learning and Talent Development (LTD) to organize a series of training programs and socialization on the dual banking system and sharia products and services. This was intended to equip training participants with sharia banking products and services that can increase cross selling activities to push growth in sharia banking growth.
As per December 2013, dual banking-oriented sharia banking product and services training and socialization included 78 training sessions participated in by 2,582 employees from the different business and support units.
AWARDS AND APPRECIATION IN 2013
As the Company’s sharia business unit, CIMB Niaga Syariah has an objective to answer the growing demand of the Indonesian people for innovative, safer, and more beneficial universal banking services. To support quality services, CIMB Niaga Syariah combines technology with its comprehensive services and excellent service quality. Banking transactions CIMB
CIMB Niaga Syariah’s effort to provide sharia banking products and services to the community has earned it some recognition. During 2013, CIMB Niaga Syariah received a number of appreciations and awards from the community for its excellent performance.
In January 2013, CIMB Niaga Syariah was among the top 5 of TOP BRAND by Marketing-Frontier Magazine for its Tabungan iBXtra.
In February 2013, CIMB Niaga earned the 2nd place at the Islamic Finance Award held by Karim Business Consulting in the category of The Best Syariah Unit, the 2nd place for the category of The Most Expansive Financing, and again, the 2nd place in the category of The Most Expansive Third Party Fund.
In April 2013, CIMB Niaga Syariah earned awards at the 2013 Indonesian Bank Loyalty Award (IBLA) event in the category of Saving Account of Islamic Banking held by Infobank magazine in collaboration with MarkPlus Insight, a research agency.
In June 2013, CIMB Niaga Syariah earned Banking Service Excellence Award (BSEA) 2013 held by Infobank Magazine in collaboration with Marketing Research Indonesia (MRI).
Based on the Bank Service Excellence Monitor (BSEM) survey conducted by MRI, CIMB Niaga was placed 2nd in the category of service excellence among the Indonesian sharia business units. This rank was better than the 5th place in the previous year. In addition, CIMB Niaga also earned the 1st place in the category of ATM, 2nd place in Customer Service and banking hall equipments, 3rd place in teller, telephone, and room comfort.
In the same month, CIMB Niaga was selected as one of the recipients of Anugerah Indonesia Property & Bank Award for The Most Innovative KPR” from Property and Bank Magazine.
In November 2013, CIMB Niaga Syariah received the ‘Excellent’ Predicate at the Infobank Sharia Finance Award 2013 held by Infobank Magazine.
In the same month, Infobank Magazine gave awards to CIMB Niaga Syariah which were the 3rd place for Sharia Saving, and 1st place for Digital Sharia Business Unit Brand category at the 2013 sharia
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FOCUS AND STRATEGIES IN 2014
Based on available data for the industry, the opportunity for sharia banking business to grow and expand is still wide open.
This sector is also supported by the Indonesian Government, the Indonesian Legislature and Bank Indonesia.
Their support has been manifested through the issuance of regulations including the Law no 21 of 2008 about sharia banks, demonstrating strong legitimacy toward development in sharia banking industry, and Law no 42 of 2010 on amendments on PPN Law and PPNBM effective 1 April 2010 that eliminates double value added tax for murabhaha-based trade transactions.
In 2014, CIMB Niaga Syariah’s focus will be how to improve productivity, develop network infrastructure, broaden product line and increase knowledge of human resource.
In order to have more product offerings, CIMB Niaga will innovate for new financing products for customers in MMQ or mutanaqisah-based agreement, Lease Based Financing in the form of Bi Tamlik Ijarah Muntahiya-based agreement.
In addition, improvements in the credit card segment will include Syariah Platinum Card Development. To gain larger third party funds, the focus will be how to increase CASA portion through haj savings as CIMB Niaga has been
assigned for the task by the Ministry of Religious Affairs as mentioned above.
Skill and competence improvement will be done through continuous education programs with a heavy focus on convenience and excellence CIMB Niaga Syariah’s products offer. Besides internal training, CIMB Niaga will also continue to educate the public about sharia banking through a program themed “Easy Ways to go Sharia”, run Syariah Banking Development Program and strengthen its promotional program by providing sales kits for commercial and consumer products.
Network infrastructure development will include systemized financing for consumer and commercial segments.
Systemized network infrastructure development related to risk management will also be a key focus of CIMB Niaga
Syariah in the coming 2014.
This fi nancial performance analysis is based on the Consolidated Financial Statements of PT Bank CIMB Niaga Tbk and Subsidiaries, which have been prepared and presented in accordance with the Indonesian Financial Accounting Standards. All information in these consolidated fi nancial statements has been disclosed in a complete and truthful manner, do not contain any incorrect information or material facts, nor do they omit information or material facts.
The Consolidated Financial Statement of PT Bank CIMB Niaga Tbk have been audited by an independent auditor KAP Tanudireja, Wibisana & Associated, a member fi rm of PWC Global Network with the opinion fairly in all material respects. The consolidated fi nancial position of PT Bank CIMB Niaga Tbk and Subsidiaries dated 31 December 2013, statement of comprehensive income and statement of cash fl ow for the year ended on that date are in accordance with the Indonesian Financial Accounting Standards.
This analysis stated for fi nancial performance dated 31 December 2013, 2012 and 2011.
In 2013, some discussion on the business segment PT Bank CIMB Niaga Tbk have been reclassifi ed in accordance with changes in directorate structure, primarily in Small, Medium and Micro Enterprises segment. Financial performance in foreign currency are disclosed
In 2013, the Company continuously innovate and develop new products and services to meet the needs of its dynamic customers.
Being the 5
thlargest bank in Indonesia, the Company keeps growing while maintaining its asset quality to support healthy
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Financial Performance Analysis
CIMB Niaga Ratio Other Banks and Industry Net Interest Margin
The Company’s Net Interest Margin declined by 53 bps to 5.3% in 2013.
This was due increment in Bank Indonesia’s benchmark rate on 5 phases during 2013 amounting to 175 bps resulted in tight funding competition in the market.
Other banks NIM was deteriorated by 55 bps to 6.1% in 2013 (2012: 6.7%).
Impacted by the funding competition in 2013, average industry NIM lowered by 60 bps to 4.9% compared to the same period of previous year at 5.5%.
Fee Income Ratio The Company’s Fee Income Ratio increased by
58 bps to 25.2% in 2013.
The increase was primarily due to higher income from foreign exchange gains.
Average Fee Income Ratio of other banks increased by 78 bps to 20.1% in 2013.
Meanwhile, Industry’s Fee Income Ratio decreased by 452 bps to 26.0% compared to previous year of 30.5%.
Cost of Credit /CoC Ratio The Company’s Cost of Credit declined by 5
bps to 0.8% in 2013. (2012: 0.9%).
The Company’s Cost of Credit improved each year and better than average other banks.
Average Cost of Credit of other banks also lowered by 22 bps to 1.3% in 2013 (2012:1.5%).
Decrement of Cost of Credit Ratio also occurred in Industry, of which lowered by 7 bps to 1.1%
compared to previous year of 1.2%.
Current Accounts and Savings Accounts / CASA Ratio Current Accounts and Savings Accounts (CASA)
Ratio improved by 52 bps to 44.0% in 2013 compared to previous year position at 43.5%.
Current Accounts and Saviongs Accounts grew by 2.9% and 17.9% respectively. The Company’s CASA Ratio was higher than average other banks.
On another hand, CASA Ratio of other banks decreased by 82 bps to 42.3% compared to the same period of previous year at 43.2%.
Funding competition resulted on weakening of Industry’s CASA Ratio by 96 bps to 56.2% in 2013.
Non Performing Loan – Gross / NPL Ratio The Company’s NPL Ratio improved by 6 bps
to 2.2% as a result of Company’s policy to tighten loan distribution as an implementation of prudent banking practice.
The Company’s NPL Ratio stood below average other banks.
NPL Ratio of other banks lowered by 13 bps in 2013 to 2.3% compared to the same period on previous year of 2.4%.
Improvement of NPL Ratio also occurred on Industry, of which decreased by 13 bps to 1.8%
in 2013 (2012: 1.9%).
5.6%
5.9%
5.9%
5.5%
4.9%
5.3%
2011 2012 2013
6.5% 6.7% 6.1%
23.6%
33.0%
24.6%
30.5%
2011 2012 2013
22.6%
19.3% 20.1%
25.2%
26.0%
43.1%
55.7%
43.5%
57.2%
2011 2012 2013
42.9%
43.2%
42.3%
44.0%
56.2%
2.6%
2.2%
2.3%
1.9%
2011 2012 2013
2.3% 2.4% 2.3%
2.2%
1.8%
0.8%
1.4%
0.9%
1.2%
2011 2012 2013
1.6% 1.5%
1.3%
0.8%
1.1%
CIMB Niaga
Other Banks (consist of Danamon, Permata, BII and BTN)
CIMB NIAGA FINANCIAL PERFORMANCE Main Discussion
In 2013, the Company recorded steady financial performance amidst fluctuation in Indonesia macro economy and managed to generate higher income than last year position. The Company continues to develop risk and liquidity management with prudent and stronger Asset and Liability Management to face fiercer business competition as well as dynamic banking environment in Indonesia.
The company’s achievements are highlighted as follows:
• Total loans grew by 8.0% to Rp157.0 trillion in 2013 (2012: Rp145.4 trillion).
• Total deposits from customers also increased by 8.4%
to Rp163.7 trillion in 2013 (2012: Rp151.0 trillion).
• Total assets increased to Rp218.9 trillion in 2013 (2012:
Rp197.4 trillion) showed an increased by 10.9%.
• Net interest income increased by 4.2% to Rp10.1 trillion in 2013 (2012: Rp9.7 trillion).
• Non interest income increased by 6.6% to Rp3.4 trillion in 2013 (2012: Rp3.2 trillion).
• Operating expense increased by 7.2% (2012: 15.8%) to Rp6.5 trillion in 2013 (2012: Rp6.1 trillion).
• Net income increased by 1.2% to Rp4.3 trillion in 2013 (2012: Rp4.2 trillion).
Along with the growth and as a part of developing its customer banking experience that limiting the constrain in maintaining excellence service to more than 4 million customers, the Company expanding its electronic networks through 677 additional ATM and SST machines to 3.159 units (2012:
2.482 units) and 249 additional CDM units or increased 108% to 480 units (2012: 231 units). The Company provided additional 15 units mobile branches to reach wider area and 13 digital lounges that deliver fast and hassle-free banking experience to retail banking customers.
In 2013, CIMB Niaga successfully improved its non- performing loan ratio at the lower level of 2.2% compared to previous year at 2.3%. Lower non-performing loan ratio proved that company’s loan growth aligned with improvement in Company’s asset quality.
The Company’s achieved excellence rentability position with total income increased by 4.8% to Rp13.6 trillion (2012:
Rp12.9 trillion) and continuance of efficiency program was able to managed company’s operating expense only grew by 7.2% in 2013 (2012: 15.8%).