Faster loan growth compare to growth of Third Party Funds caused Loan to Deposit Ratio (LDR) to increase from 94.5%
in end of 2013 to be 99.5% in end of 2014.
In order to maintain a sound level of liquidity, Treasury and Capital Market Directorate also sought alternative sources of funding, where CIMB Niaga had successfully receive long- term bilateral loans with competitive rates from two foreign banks. Meanwhile, the option to seek additional funding through the issuance of bonds was not done considering the unfavorable economic condition in 2014.
To explore other alternatives to fulfill liquidity requirement while complying with Bank Indonesia’s policy, CIMB Niaga had signed a Mini MRA (Master Repurchase Agreement) with 29 local and foreign banks in 2014. Additionally, starting 2014, Treasury and Capital Market Directorate is managing funds from CIMB Niaga’s high net worth corporate customers.
Revenue Contribution
Treasury and Capital Market Directorate carried out few activities that contributed to the Bank’s income as well, which include foreign exchange trading, portfolio management for Government and Corporate bonds and capital book portfolio management. Overall, revenue target set for 2014 is achieved.
Uncertain economic condition in 2014 had caused high volatility in bond prices. Treasury and Capital Market Directorate took advantage on this situation to generate higher revenue compare to previous year.
Foreign Currency Transactions
Year 2014 was indicated by less volatility in foreign exchange market following a decline in volume, which was caused by the economic downturn where individual and business foreign currency’s demand weakens. This condition put pressure on CIMB Niaga’s income from foreign exchange transactions, as also experienced by other banks in Indonesia.
Structured Products
Treasury and Capital Market Directorate is currently managing two structured products denominated in USD.
Meanwhile, the selling activity for four new structured products denominated in other foreign currencies would commenced soon as they have received approval from OJK.
Sharia Treasury
Sharia Treasury experienced negative growth in 2014 resulting in lower revenue, particularly in sharia-based foreign exchange and money market transactions. The main reason was caused by too many IDR sharia loans as well as the decline in liquidity level affected by the increase competition for third party funds amongst other sharia banks.
This situation had driven Sharia Treasury to collaborate with conventional Treasury in managing some portfolios.
Services and Networks
Treasury and Capital Market Directorate operates on an extensive network across Indonesia’s major cities, including Jakarta, Medan, Bandung, Semarang, Solo, Surabaya, Denpasar and Balikpapan, in order to meet customers’
needs of many treasury products. Furthermore, most CIMB Niaga’s branches in Indonesia provide electronic services for Foreign Exchange as well as Marketable Securities products.
This service gives a real time price quotation with a faster distribution process.
Besides visiting branches, foreign exchange transaction services could be acquired real time on-line via Biz Net and CIMB Clicks, irrespective of time and location.
Providers in 4 categories based on a survey conducted by Asia Money. CIMB Niaga also received Structured Product Asia Award 2014 as a recognition on the Bank’s ability to develop and manage structured products in Indonesia.
Additionally, the Bank earned Asia Risk Award (House of the Year, Indonesia) for 3 consecutive years. This award assesses the areas of risk management framework, liquidity management and the ability to provide hedging in accordance to customers’ needs.
Treasury and Capital Market Directorate’s Strategies in 2015 Treasury and Capital Market Directorate would continue to implement Integration, Innovation, Optimization and Adaptation strategies while developing a sustainable business model.
This strategy would be executed through activities such as development of new structured product, expansion of corporate and retail customer base, and cooperation with smaller scale banks as counterparties for foreign exchange, bonds and derivatives transactions. Additionally, CIMB Niaga would continue to develop hedging products that are suitable for customers’ needs while complying with government’s policy in order to encourage businesses to hedge their risks.
Another strategy is funding optimization during excessive short term liquidity to generate higher margin compare to placement in Bank Indonesia. Furthermore, Treasury and Capital Market Directorate is currently considering to acquire long-term bilateral funds.
Meanwhile, Sharia Treasury would be focused on managing the Ministry of Religious Affairs’ Hajj funds through series of aggressive campaigns, with theme “Sharia for You,” to increase funding and loan growth for CIMB Niaga Sharia Business Unit.
It has been more than a decade since PT Holcim Indonesia Tbk first built cooperation with CIMB Niaga. We have benefited from various services such as Cash Management, Lending, Financing and Treasury Distributors. We would like to thank the Bank for such continuous support.
Distributors Financing is one of the Bank’s products that our distributors have found very helpful in securing funds. In order to improve this particular service we have developed a new system of “payment gateway” where the system allows us to make orders and monitor distributors’
credit limit in an automated bookkeeping.
For Treasury products we feel CIMB Niaga has always offered the best exchange rate. In addition, the Bank’s traders will usually give adequate information about market condition, which has made it easier for us to make important decisions. In addition to daily operations we receive great assistance from the Bank’s branches.
It is our hope that we can enhance our partnership with CIMB Niaga. Our further focus is how to comply with Bank Indonesia regulations that suggest companies apply the precautionary principles on foreign debt.
Kent Carson
Chief Financial Officer PT Holcim Indonesia Tbk
Business and Operations Report
By developing a comprehensive branchless service platform, Transaction Banking
managed to post an increased income
growth, and an improved program activation and service quality for all of its customer
groups.
The year 2014 showcased the outstanding performance of Transaction Banking supporting CIMB Niaga’s business growth through Cash Management, Remittance, Trade Finance, and Value Chain.
This encouraging performance was accomplished by employing the strategy of acquiring more large corporations - both local and multi national companies (MNC) - and through customer loyalty programs, product campaigns, new product development, brand awareness & competitiveness enhancement, as well as continuous improvements in service standards.
In 2014, Transaction Banking has secured some deals with numbers of large-sized corporates, key players in their respective industries, for providing cash management and trade finance services. Each of the deals have been strengthened through penetration into the value chains services, . by linking the value chains to their down line distributors/
retailers in order to capture end-to-end business opportunities, therefor CIMB Niaga will be their main bank in clearing/ settlement service large-sized corporates clients, particularly in the FMCG and infrastructure industries.