SME and Consumer Mortgage Loans Grew by 10% and 36%, respectively; Total Non-Performing Loans decreased by 9%; Cost of Credit improved by 21%
Jakarta, 12 February 2018. PT Bank Danamon Indonesia Tbk (“Bank Danamon” or the “Bank”) today announced its full year 2017 financial results.
The Bank booked a net profit after taxes (NPAT) of IDR 3.7 trillion in 2017, which is a 38% growth as compared to a year earlier. The profit growth is a result of better funding cost, discipline in operating expenses, and improvement in asset quality.
“Bank Danamon continues to be profitable as the momentum generated from our long term strategic initiatives intensified. Our sustained profit growth stems from our efforts in diversifying revenue streams, strengthening customer service, and comprehensive implementation of technology and digital solutions,” said Sng Seow Wah, President Director of Danamon.
Growth in SME, Enterprise, and Consumer Mortgage loans
Bank Danamon loan portfolios continue to diversify towards non-mass market segment. The Bank recorded growth in the Small Medium Enterprises (SME), Enterprise and Consumer Mortgage segments. SME Banking portfolio increased 10% to IDR 28.5 trillion. Enterprise Banking portfolio, consisting of Corporate, Commercial Banking, and Financial Institutions, grew 4% to IDR 37.6 trillion. Meanwhile, Consumer Mortgage loans grew 36% to IDR 6.0 trillion.
Excluding Micro financing, overall loan portfolio and Trade Finance grew 5% to IDR 122.9 trillion as compared to the previous year. Adira Finance’s new financings grew by 5% year-on-year for the two-wheelers segment and 6% for the four-wheelers segment. Adira Finance’s total financing stood at IDR 45.2 trillion or up 2% compared to a year ago.
Healthy Liquidity and Capital
With a Loan to Funding Ratio (LFR) of 93.3%, liquidity is well managed. At the same time, Current and Savings Accounts (CASA) increased by 4% to IDR 50.5 trillion, and CASA ratio improved to 48.3% from 46.0% a year ago. Time Deposit decreased by 5% to IDR 54.1 trillion as Bank Danamon let go of higher priced third-party funds.
Bank Danamon’s capital adequacy ratio (CAR) remained one of the best among peer banks. Consolidated and Bank-only CAR stood at 22.1% and 23.2%, respectively.
Improvement in asset quality
Bank Danamon continued to improve its asset quality through prudent enforcement of risk assessment procedures, disciplined collection and recovery of debts. In 2017, we also improved our credit governance by integrating all credit approval functions in every business segment under a Chief Credit Officer. This allows for a more independent credit approval process and improvement in credit quality. As of the end of 2017, total non-performing loans (NPL) decreased by 9% to IDR 3.4 trillion, whereas the industry’s NPL increased 4% compared to a year ago. NPL ratio stood at 2.8% versus 3.1% in 2016. Cost of credit also decreased by 21% to IDR 3.5 trillion. Cost of credit ratio stood at 2.8%, an improvement compared to 3.5% last year.