Danamon reported a net profit after tax of Rp 1,473 billion for the first semester of 2011 against a net profit after tax of Rp 1,433 billion in the same period last year. The mere increase was mainly due to higher earning assets volume was largely offset by narrower interest margin. Meanwhile, operating expense increased 15% as the bank continued to build up its presence in various market segments. Cost of credit also increased but at much lower rate than the loan growth rate. Conservative risk management and prudent credit underwriting discipline kept our cost of credit and assets quality at satisfactory level. Hence, Basic Earnings per Share (EPS) was at Rp 175 as compared to Rp 170 a year ago.
Income Statement
Capitalizing on robust business expansion and rising household
income, Danamon continued to grow its customer base across
Capitalizing on robust business expansion and rising household
income, Danamon continued to grow its customer base across
multiple distribution platforms. Loan grew 8% qoq in 2Q11 taking
full year loan growth to 31%. Consequently, in the first semester of
2011, Bank Danamon recorded a higher net interest income of Rp
5,239 billion or up 8% compared to the same period last year. This
was mainly driven by higher average earning assets that increased
from Rp 81,829 billion to Rp 102,608 billion.
As pressure of inflation eased, banks increased their risk appetite
and expanded aggressively. Total industry loan has grown 23%
year on year. Competition got tougher in almost all segments as
banks offered competitive rates for investment and working capital
loans in corporate, commercial, and SME segments to gain market
share. Consequently, loan yields declined due to competitive
pressure as almost all of Indonesian banks are focusing on these
segments. Positively, sound operating environment helps assets
quality remained at healthy level.
Yields for retail segment such as mortgage loan and auto loan
ware slightly decline as well. As such, Adira Finance’s yields after
acquisition cost for car and motorcycle loans declined to 22.4%
and 14.5%, respectively from 25.1% and 17.5% a year ago.
Cost of funds was at 5.7%, higher than 5.4% recorded in 1H10 as
competition intensified because loan growth continued to outpace the
deposit growth. In addition, BI adjusted the statutory reserve
requirement twice from 1% to 5% in March 2011 and from 5% to 8%
in June 2011 and raised the ceiling deposit rate eligible for
government guarantee from 7% to 7.25% in February 2011.
Therefore, our NIM stood at 10.0%, still one of the highest among the
peers but lower than 11.6% recorded a year ago.
Compared to 1H10, the bank’s third party deposit was up 23% driven
by time deposit. The growth rate is much higher than the industry’s
average reflecting the bank’s solid capability to attract funding in the
competitive environment. CASA grew 17.5% to Rp 31,171 billion or
37.3% of total customer deposits. Funding will remain one of our top
priorities as the bank aims to strengthen deposit franchise and
increase the CASA ratio to 50% in 2015.
Non-interest income increased 12% to Rp 1,771 billion driven by
higher credit related fees that currently made up 76% of total noninterest
income as compared to 69% a year ago. Danamon continued
to offer differentiated products and improve cross sell to our broad
customers. Incomes originated from bancassurance and general
insurance products increased due to higher demand as investor
sentiment improved. We expect income from wealth management
and insurance products will more than offset the effect of low interest
rates on net interest income in the future.
During first semester of 2011, we recorded Rp 23 billion from sale of
marketable securities. The amount is much lower than Rp 99 billion a
year ago as market is relatively less volatile and the bank’s bond
portfolio shrunk. As such, non-interest income contributed to 25% of
the bank’s total operating income, relatively unchanged from the
corresponding period a year ago. Hence, compared to 1H10, our
operating income grew by 9% to Rp 7,010 billion.
Operating expenses was at Rp 3,638 billion or 15% higher than Rp
3,160 billion in the previous year reflecting salary increment, inflation
impacts and higher number of staffs recruited to support growing
business offset by continuous efforts to increase efficiency. The bank
also continued to invest for the future by intensifying its marketing
campaign and expanded its network. During July 2010 and June 2011
period, the bank added 90 Adira Quantum outlets, 12 Adira Insurance
outlets, 243 ATMs and rolled out pawn-broking business. This,
together with margin compression has increased the bank’s cost to
income ratio from 49.2% in 1H10 to 51.9% in 1H11.
Our cost of credit went up 16% to Rp 1,326 billion as compared to last
year’s Rp 1,139 billion despite significant increase in outstanding
Cost of funds was at 5.7%, higher than 5.4% recorded in 1H10 as
competition intensified because loan growth continued to outpace the
deposit growth. In addition, BI adjusted the statutory reserve
requirement twice from 1% to 5% in March 2011 and from 5% to 8%
in June 2011 and raised the ceiling deposit rate eligible for
government guarantee from 7% to 7.25% in February 2011.
Therefore, our NIM stood at 10.0%, still one of the highest among the
peers but lower than 11.6% recorded a year ago.
Compared to 1H10, the bank’s third party deposit was up 23% driven
by time deposit. The growth rate is much higher than the industry’s
average reflecting the bank’s solid capability to attract funding in the
competitive environment. CASA grew 17.5% to Rp 31,171 billion or
37.3% of total customer deposits. Funding will remain one of our top
priorities as the bank aims to strengthen deposit franchise and
increase the CASA ratio to 50% in 2015.
Non-interest income increased 12% to Rp 1,771 billion driven by
higher credit related fees that currently made up 76% of total noninterest
income as compared to 69% a year ago. Danamon continued
to offer differentiated products and improve cross sell to our broad
customers. Incomes originated from bancassurance and general
insurance products increased due to higher demand as investor
sentiment improved. We expect income from wealth management
and insurance products will more than offset the effect of low interest
rates on net interest income in the future.
During first semester of 2011, we recorded Rp 23 billion from sale of
marketable securities. The amount is much lower than Rp 99 billion a
year ago as market is relatively less volatile and the bank’s bond
portfolio shrunk. As such, non-interest income contributed to 25% of
the bank’s total operating income, relatively unchanged from the
corresponding period a year ago. Hence, compared to 1H10, our
operating income grew by 9% to Rp 7,010 billion.
Operating expenses was at Rp 3,638 billion or 15% higher than Rp
3,160 billion in the previous year reflecting salary increment, inflation
impacts and higher number of staffs recruited to support growing
business offset by continuous efforts to increase efficiency. The bank
also continued to invest for the future by intensifying its marketing
campaign and expanded its network. During July 2010 and June 2011
period, the bank added 90 Adira Quantum outlets, 12 Adira Insurance
outlets, 243 ATMs and rolled out pawn-broking business. This,
together with margin compression has increased the bank’s cost to
income ratio from 49.2% in 1H10 to 51.9% in 1H11.
Our cost of credit went up 16% to Rp 1,326 billion as compared to last
year’s Rp 1,139 billion despite significant increase in outstanding
loans reflecting the bank’s proven capability in managing its portfolio.
Thus, total allowances for possible losses stood at Rp 2,880 billion
compared to Rp 2,744 billion last year.
Hence, cost of credit over average earning assets stood at 3.2%
compared to 3.4% a year ago. Further, the cost of credit in our
consumer auto financing business was at 4.7%, while the cost of credit
in micro lending business was at 5.1%.
Taken all together, for the first semester of 2011, net profit after tax was
Rp 1,473 billion, or up 3% to Rp 1,433 recorded in 1H10. ROAA and
ROAE were at 2.4% and 17.1% respectively from 2.9% and 18.6% in
the same period last year
Thus, total allowances for possible losses stood at Rp 2,880 billion
compared to Rp 2,744 billion last year.
Hence, cost of credit over average earning assets stood at 3.2%
compared to 3.4% a year ago. Further, the cost of credit in our
consumer auto financing business was at 4.7%, while the cost of credit
in micro lending business was at 5.1%.
Taken all together, for the first semester of 2011, net profit after tax was
Rp 1,473 billion, or up 3% to Rp 1,433 recorded in 1H10. ROAA and
ROAE were at 2.4% and 17.1% respectively from 2.9% and 18.6% in
the same period last year
Balance Sheet
Recently, Bank Indonesia revised upward the expected GDP growth.
The main driver of the growth would remain domestic consumption. As
one of the largest consumption lenders in the country, Danamon would
be undoubtedly reap benefits from such measure. However, we would
be remain prudent in anticipating economics and market trend and
develop appropriate strategy that balances capital, assets quality,
growth, and profitability.
We will maintain mass market as our largest contributor. Compared to
a year ago, mass market loans (auto loans, durable goods loans, loans
for self employed mass market and pawn- broking loans) rose 36% to
Rp 53,150 billion. Hence, mass market loans accounted for 57% of our
loan book as compared to 55% a year earlier.
DSP, which serves micro and small scale enterprises, managed to
grow its micro loans 20% to Rp 16,442 billion, contributed 18% of our
total loan book. Despite more and more banks entered this segment,
the prospect is still promising as the market penetration is still low. Our
consumer financing businesses delivered outstanding outcomes as
spending propensity rise. Adira Finance which offers auto loans
reported a 46% growth in receivables as demand for cars and
motorcycles remained robust. Automotive loans rose to Rp 35,303 and
contributed 38% of total loan book. Adira Quantum, which offers white
goods financing, grew by 38% to reach Rp 1,396 billion. In the first
quarter 2011, we also rolled out our pawn broking business that offers
loans to individuals in mass market segment by taking gold as
collateral. At the end of the first semester, the loan outstanding from
the new established business is amounted to Rp 9 billion.
We continued to deepen our customer relationship and enhance our
service delivery capabilities in SME and Commercial segments. Midsize
loans up 29% to Rp 23,036 billion and represented 25% of our
loan. Commercial loans grew 25% to Rp 8,028 billion, SME loans rose
29% to Rp 11,603 while ABF (Assets Based Financing) loans up 39%
Recently, Bank Indonesia revised upward the expected GDP growth.
The main driver of the growth would remain domestic consumption. As
one of the largest consumption lenders in the country, Danamon would
be undoubtedly reap benefits from such measure. However, we would
be remain prudent in anticipating economics and market trend and
develop appropriate strategy that balances capital, assets quality,
growth, and profitability.
We will maintain mass market as our largest contributor. Compared to
a year ago, mass market loans (auto loans, durable goods loans, loans
for self employed mass market and pawn- broking loans) rose 36% to
Rp 53,150 billion. Hence, mass market loans accounted for 57% of our
loan book as compared to 55% a year earlier.
DSP, which serves micro and small scale enterprises, managed to
grow its micro loans 20% to Rp 16,442 billion, contributed 18% of our
total loan book. Despite more and more banks entered this segment,
the prospect is still promising as the market penetration is still low. Our
consumer financing businesses delivered outstanding outcomes as
spending propensity rise. Adira Finance which offers auto loans
reported a 46% growth in receivables as demand for cars and
motorcycles remained robust. Automotive loans rose to Rp 35,303 and
contributed 38% of total loan book. Adira Quantum, which offers white
goods financing, grew by 38% to reach Rp 1,396 billion. In the first
quarter 2011, we also rolled out our pawn broking business that offers
loans to individuals in mass market segment by taking gold as
collateral. At the end of the first semester, the loan outstanding from
the new established business is amounted to Rp 9 billion.
We continued to deepen our customer relationship and enhance our
service delivery capabilities in SME and Commercial segments. Midsize
loans up 29% to Rp 23,036 billion and represented 25% of our
loan. Commercial loans grew 25% to Rp 8,028 billion, SME loans rose
29% to Rp 11,603 while ABF (Assets Based Financing) loans up 39%
to Rp 3,405 billion. The commercial, SME and ABF loans made up
9%, 13% and 4% of total loan book, respectively.
In corporate segment, we added a few service points and enhanced
our products to provide convenience to customers. Wholesale loans
grew 33% to Rp 12,012 billion and represented 13% of our loan book.
Non-performing loans were Rp 2,692 billion as compared to Rp 2,383
billion a year earlier. As such, NPL ratio improved to 2.9% as
compared to last year’s 3.4% on the back of benign operating
environments. NPL ratio in micro lending business stood at 6.3%, as
compared to 5.2% in the previous year. Similarly, NPL ratio in auto
financing business was slightly increased to 1.4% compared to 1.0% a
year earlier. Further, the ratio of impairment loss allowance to NPL
stood at 101.9%.
In Indonesia, third party deposits remained concentrated in a few big
banks only. As of March 2011, the top three banks accounted for
approximately 40% of the total market share. Positively, Bank
Danamon was successfully attracted new customers and increased its
market share. The bank’s current and saving accounts increased 16%
and 18% to Rp 10,354 billion and Rp 20,817 billion, while time
deposits grew 26% to Rp 52,365. As such, current account and
saving account (CASA) contributed to 37% of customer deposits as
compared to 39% a year earlier.
Adira Finance, issued Rp 2,500 billion of fixed term bonds in 2Q11.
The fixed rate and longer term duration provided by the bonds enable
the bank to better manage liquidity gap and interest rate risk. Total
long-term funding (senior bonds and bilateral loans) at the end of
1H11 amounted to Rp 13,610 billion or compared to Rp 8,194 billion
in 1H10. Taken all together, total funding increased 28% to Rp 97,416
billion. Thus, the bank continued to be in a good shape in terms of
liquidity. Regulatory LDR stood at 99.0% compared to 98.8% last year
while modified LDR was at 91.9% as opposed to 89.6% in 1H10.
As we have fully adopted capital charge for operational risk in the
beginning of the year, our stand alone and consolidated CAR declined
to 12.2 and 14.0%, still reflecting strong capital base and beyond the
minimum 8% requirement imposed by Bank Indonesia (BI)
9%, 13% and 4% of total loan book, respectively.
In corporate segment, we added a few service points and enhanced
our products to provide convenience to customers. Wholesale loans
grew 33% to Rp 12,012 billion and represented 13% of our loan book.
Non-performing loans were Rp 2,692 billion as compared to Rp 2,383
billion a year earlier. As such, NPL ratio improved to 2.9% as
compared to last year’s 3.4% on the back of benign operating
environments. NPL ratio in micro lending business stood at 6.3%, as
compared to 5.2% in the previous year. Similarly, NPL ratio in auto
financing business was slightly increased to 1.4% compared to 1.0% a
year earlier. Further, the ratio of impairment loss allowance to NPL
stood at 101.9%.
In Indonesia, third party deposits remained concentrated in a few big
banks only. As of March 2011, the top three banks accounted for
approximately 40% of the total market share. Positively, Bank
Danamon was successfully attracted new customers and increased its
market share. The bank’s current and saving accounts increased 16%
and 18% to Rp 10,354 billion and Rp 20,817 billion, while time
deposits grew 26% to Rp 52,365. As such, current account and
saving account (CASA) contributed to 37% of customer deposits as
compared to 39% a year earlier.
Adira Finance, issued Rp 2,500 billion of fixed term bonds in 2Q11.
The fixed rate and longer term duration provided by the bonds enable
the bank to better manage liquidity gap and interest rate risk. Total
long-term funding (senior bonds and bilateral loans) at the end of
1H11 amounted to Rp 13,610 billion or compared to Rp 8,194 billion
in 1H10. Taken all together, total funding increased 28% to Rp 97,416
billion. Thus, the bank continued to be in a good shape in terms of
liquidity. Regulatory LDR stood at 99.0% compared to 98.8% last year
while modified LDR was at 91.9% as opposed to 89.6% in 1H10.
As we have fully adopted capital charge for operational risk in the
beginning of the year, our stand alone and consolidated CAR declined
to 12.2 and 14.0%, still reflecting strong capital base and beyond the
minimum 8% requirement imposed by Bank Indonesia (BI)
Corporate Updates
Bond Issuance
• Adira Finance issued Rp 2.5 trillion of fixed rate bonds in May 2011.
• The bonds issuance is as part of the bank’s strategy to diversify funding sources as well as for asset
and liability management
2010 Dividend
• Dividend payout for fiscal year 2010 is 35%.
Bond Issuance
• Adira Finance issued Rp 2.5 trillion of fixed rate bonds in May 2011.
• The bonds issuance is as part of the bank’s strategy to diversify funding sources as well as for asset
and liability management
2010 Dividend
• Dividend payout for fiscal year 2010 is 35%.