Bank Danamon Posted Quarterly Earnings Rebound, Sustained by Uplift in Asset Quality

Press Release / 27 October 2020

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Loans in Enterprise Banking Segment grew 26% year-on-year, supported by MUFG Collaboration

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Jakarta, 27 October 2020. PT Bank Danamon Indonesia Tbk (“Bank Danamon” or the “Bank”) today announced its first nine months of 2020 financial results.

Bank Danamon’s net profit after taxes (NPAT) in the third quarter of 2020 increased from the previous quarter to IDR 632 billion. This brought the Bank’s total NPAT for the first nine months of the year to IDR 1.48 trillion. Pre-provision operating profit (PPOP) increased by 9% as compared to a year ago. 

Profitability in the third quarter has improved due to, among others, resilient non-interest income and better asset quality. Non-performing loans ratio of 3.2% was a 90 basis points improvement compared to the second quarter. In addition, cost of credit has also  improved by 54% on a quarter-to-quarter basis. 

Supported by strong collaborations with MUFG, loans in Enterprise Banking segment continued to expand with 26% growth as compared to a year ago. Funding franchise continued to strengthen with a 13% year-on-year increase in current and savings account (CASA), taking CASA ratio to a healthy 51.5%.  

“In the third quarter of 2020, our performance showed positive trends which have highlighted the Bank’s ability to overcome challenging operating environtment during 2020. In addition, we also have managed to reduce NPL and built higher coverage to provide strong buffer,” said Yasushi Itagaki, President Director, Bank Danamon. 

“We are also proud to be recognised by regional institutions, as we have received three important awards, which are Best Digital Bank 2020 by Asiamoney, Highly Commended, Best Digital Banking Initiative Trailblazer Awards 2020 by Retail Banking International, and DX 2020 Gamechanger by IDC. This accolades reflect our continuous commitment to deliver the best financial solutions, products and services to meet our customer needs,” Yasushi Itagaki added.

Lending to Key Segments

Enterprise Banking loan portfolio, consisting of Corporate, Commercial Banking, and Financial Institutions, grew 26% year-on-year to IDR 53.1 trillion, supported by collaboration with MUFG network. Loans in the Small and Medium Enterprises (SME) and the Consumer segment were at IDR 25.8 trillion and IDR 11.6 trillion at the end of September 2020, respectively.  

In terms of automotive financing, Adira Finance recorded total financing of IDR 45.7 trillion in the first nine months of 2020, amid a challenging condition in the automotive industry.  

Overall loan portfolio and Trade Finance is at IDR 137.9 trillion at the end of September 2020. 

Healthy Asset Quality

Bank Danamon maintained its prudent asset quality management through enforcement of risk assessment procedures, disciplined collection, recovery of debts and sufficient provisionings. As a results, the Bank’s nonperforming loan (NPL) improved to 3.2% at the end of the third quarter 2020. At the same time, we continue to help customers who are impacted by COVID-19 through loan restructurings.

Growth in Fee Income

Fee income stood at IDR 2.58 trillion, supported by a 23% increase from bancassurance and 109% increase on treasury gains from marketable securities and forex. 

Healthy Liquidity and Capital 

Bank Danamon continued to focus on granular funding with 12% year-on-year growth. Current and savings accounts (CASA) balances increased 13% year-on-year to IDR 61.3 trillion. As of September 2020, CASA comprised of more than half of the Bank’s funding with a CASA ratio of 51.8%. Macroprudential Intermediation Ratio (RIM) reached 89.8%, providing ample liquidity to the Bank.

Bank Danamon’s capital adequacy ratio (CAR) remained one of the strongest among peer banks, following the Bank’s confirmation as a BUKU 4 bank. Consolidated CAR was at 24.9% at the end of September 2020, with total tier-1 capital at IDR 38.4 trillion.