Enterprise Banking Loan Portfolio Grows 11% YoY; CASA Ratio increased to 54.7%
Jakarta, 28 April 2021. PT Bank Danamon Indonesia Tbk (Bank Danamon or the Bank) announced its financial report for first quarter 2021 today.
Several key initiatives implemented by Bank Danamon in 2020 resulted in steady improvement of its first quarter performance for the year. Danamon recorded net profit after taxes (NPAT) amounting to Rp522 billion in Q1 2021. Enterprise banking loans recorded positive growth of 11% YoY through the support of continuous collaboration with MUFG, while Current Account and Savings Account (CASA) ratio climbed 480 basis points (bps) to 54.7% compared to the previous year. Auto finance disbursement also displayed healthy growth supported by the luxury tax relaxation policy.
“Although recovery has not quite reached conditions prior to COVID-19 pandemic, loan demand has been exhibiting a positive trend, which coincides with a well-maintained asset quality. Danamon has been laying a strong foundation to ensure sustainable growth in the future, including continuous improvement on digital services to meet clients’ every need and forging strategic partnerships with leading institutions to provide enhanced customer experience. Our first quarter performance showed positive signs in alignment with the country’s economic recovery. Danamon recorded solid gains in enterprise banking loans through MUFG collaboration, prudent risk management process, and structured loan collection and recovery procedures which are key factors supporting stable asset quality,” stated Yasushi Itagaki, President Director of Bank Danamon.
Cost of credit trend is also improving, decreasing 51% to Rp1.2 trillion compared to the previous quarter. Danamon also continued prudent management of operational costs, which resulted in a cost to income ratio of 51.6%. Net profit after tax recorded IDR522 billion, an increase from the previous quarter.
Loan Growth in Key Segments
Loans portfolio has also been improving, parallel to economic recovery. Danamon recorded 11% growth in enterprise banking loans composed of both Corporate and Commercial Banking, as well as Financial Institutions. This development was made possible through collaboration with MUFG Group, a global network of one of the largest banks in the world. In the first quarter of 2021, Danamon and MUFG Group successfully hosted the first collaborative event during the pandemic: a Business Matching Fair. The event hosted meetings between corporate and commercial banking clients from Indonesia with 120 potential corporate partners from Indonesia, Thailand, Philippines, Vietnam and Myanmar. Various industries were represented including fast moving consumer goods (FMCG), health care, food and beverage (F&B), cosmetics, health products and household goods.
The luxury tax relaxation policy implemented 1 March 2021 has helped drive loan demand for auto financing as observed throughout the month of March. As a result, Adira Finance, a subsidiary company of Danamon focusing on auto finance, managed to record positive gains in auto finance disbursements. The nine-month tax exemption period is expected to continue to positively impact auto financing activities throughout 2021.
Ample Liquidity and Funding
In the first quarter of 2021, Danamon recorded a current account and savings account (CASA) increase of 12% from the previous year, currently reaching Rp67 trillion. CASA ratio increased by 480 bps from last year, now at 54.7% supported by growth in granular funding. Better funding structures resulted in lower cost of funds thus contributing to a more solid foundation for future growth.
Macroprudential Intermediation Ratio was positioned at 86.6%, LDR 85.3% and LCR 195.7% reflecting high liquidity.
Minimum Capital Adequacy Ratio (CAR) remains the strongest in its class. Consolidated CAR stood at 25.7%, while CAR bank only registered 26.2%.
Healthy Quality Asset
Positive results can be attributed mainly to disciplined risk assessment procedures, as well as prudent credit collection and recovery process. Danamon recorded a non-performing loan ratio or NPL of 3.3% in the first quarter of 2021, an improvement of 10 bps compared to the previous year, and this was supported by a high NPL coverage ratio of 171%. The cost of credit ratio stood at 3.6% by the end of the first quarter of the year.