Jakarta, 30 April 2020. PT Bank Danamon Indonesia Tbk (“Bank Danamon” or the “Bank”) today announced its first quarter 2020 financial results.
The Bank booked net profit after taxes (NPAT) of IDR 1.25 trillion in the first quarter of 2020, a 33% growth as compared to a year earlier. The NPAT growth was driven by the Bank’s focus in its key growth engines, namely loans to the Enterprise Banking and consumer mortgage segments as well as the automotive financing sector. The profit growth is also supported by better revenue composition from fee-based income, in addition to stronger funding franchise as shown by a 17% increase compared to a year earlier in Current Account and Savings (CASA) to IDR 59.7 trillion.
“Tomorrow, 1 May 2020, marks the first anniversary of Bank Danamon being part of MUFG, one of the largest financial institutions in the world. In the first quarter of 2020, positive results achieved through collaboration with MUFG and our business partners have started to show. Enterprise Banking recorded significant loan growth following collaborations with numerous large corporates made last year, while our fee based income increase was boosted by our extended partnership with our strategic bancassurance partner Manulife Indonesia,” said Yasushi Itagaki, President Director of Danamon.
“During the COVID-19 pandemic, the safety of our customers and employees are our utmost priority. We have taken steps to ensure your health and safety, including by supporting the government’s advisory to stay at home by limiting our branch operations and encouraging the use of our digital channels such as D-Bank and Danamon Online Banking. We also perform temperature checks at every point of entry, hand sanitizers at multiple locations, restricting our staffs to shake hands, require the use of face mask, and social/physical distancing principles for every interaction. We would like to thank customers for their understanding and support in implementing these steps to prevent the spread of the virus,” added Itagaki.
Lending Growth in Key Segments
Enterprise Banking loan portfolio, consisting of Corporate, Commercial Banking, and Financial Institutions, grew 22% to IDR 49.5 trillion. Loans to the Small and Medium Enterprises (SME) segment and the Consumer Mortgage segment were at IDR 28.5 trillion and IDR 8.9 trillion at the end of March 2020, respectively.
In terms of automotive financing, Adira Finance recorded a 4% growth as compared to a year earlier to IDR 54.7 trillion, despite slowdown in the automotive industry.
Overall loan portfolio and Trade Finance grew 7% to IDR 147 trillion as compared to the previous year.
Healthy Asset Quality
Bank Danamon maintained its prudent asset quality management through enforcement of risk assessment procedures, disciplined collection and recovery of debts. The Bank’s nonperforming loan (NPL) at the end of first quarter 2020 is at 3.4% and was secured by higher loss coverage at 129.3%. Restructured loans ratio improved by 20 basis points as compared to a year earlier to 2.4%.
Significant Growth in Fee Income
Fee income grew by 67% compared to a year earlier to IDR 1.3 trillion, supported by an 192% increase from bancassurance fee and 156% increase on treasury gains from marketable securities and forex. Danamon and and PT Asuransi Jiwa Manulife Indonesia (Manulife Indonesia) have extended their life insurance bancassurance agreement until 2036, allowing the two financials services leaders to continue to develop and offer tailored solutions, including pension funds, health protection and sharia-compliant insurance products to its customers. In addition, Danamon’s general insurance partnership with Adira Insurance continues to prosper.
Healthy Liquidity and Capital
Danamon continued to focus on granular funding with 14% year-on-year growth in current and savings accounts (CASA) and TD regular. CASA balances increased by 17% to IDR 59.7 trillion, as CASA comprised close to half of the Bank’s funding with a CASA ratio of 49.9%. Macroprudential Intermediation Ratio (RIM) reached 95.9% at the end of first quarter 2020, in line with management’s liquidity target.
Bank Danamon’s capital adequacy ratio (CAR) remained one of the strongest among peer banks. Consolidated CAR was at 22.1% at the end of March 2020.