State owned bank group, the most influential bank of the country faces the two great problems during the first quartal of 2016. The state owned banks group are the most influential ones in term of investments through which they own 40% from total of investment. At the end of 2015, four stated owned banks which are mandiri, bni, bri and btn owned 2445,227 trillion rupiahs from total investment of bank industry.
Since the state owned banks are the most influential, they also influence the other bank industry of national. Its performance determines the entire performance of banks of nationwide, thus it is central since it's the market leader.
In general, the performance of state-owned banks during the first quarter of 2016 was weaker as the continued slowdown in economic growth in Indonesia.
The slowdown in the domestic economy can not be separated from the global economic recovery is still weak. Especially the europe still faces turmoil within their economy, japan is still sinking and USA who is central in world economy is still seeking to resolve to solidity. Meanwhile though,china as the new power of asia economy leads to a stable country but still has high downside risk.
In the state, acceleration of capital expenditures and goods related to the central government's infrastructure development has not been able to boost economic growth. In previous months before the plan of economy released by president jokowi, rupiah ever fell down to its lowest rate up to rp 15000 per dollar,
Based on the report of the Central Statistics Agency (BPS), Indonesia's economic growth during the first quarter of 2016 only 4.92 percent, down from the fourth quarter of 2015 by 5.04 percent.
Due to the sluggish real sector, lending, including by state-owned banks also weakened.
Credit growth BRI, BNI and BTN per end of March 2016 compared to the end of 2015 in a row just 0.48 percent, 0.19 percent and 2.87 percent.
Comparison using the position of the end of 2015 because you want to capture only state-owned bank's performance during the first quarter of 2016.
Bank Mandiri not to publish financial statements in March 2016. Bank Mandiri Reports are available only until February 2016.
Nonperforming loans surged
Amid a slowdown in the pace of loans, NPLs (non-performing loans / NPL) state-owned banks actually jumped. Many debtors in the mining sector collapsed so it could no longer pay its debts to the banks, including state-owned banks.
The mining sector is the sector most affected by the global economic downturn and the fall in oil prices and coal. Figures NPL Bank BRI rose from 2.02 percent at the end of 2015 to 2.22 percent by the end of March 2016. Figures BNI NPLs rose from 2.7 percent to 2.8 percent.
Among the state-owned bank, Bank BTN NPL is the highest since increased from 3.42 percent to 3.59 percent.
In 2015, BTN actually able to lower the NPL of 4.78 percent at the end of the first quarter of 2015 to 3.42 percent at the end of 2015.However, during the first quarter of 2016, NPL BTN back up.
As a result of a surge in NPLs, banks must set aside reserves SOE course, be funded by the profits. In other words, the increase in NPLs will erode bank profits.
The slow pace of loan portfolio also potentially reduce the bank's revenues and profits. Thus, during the first quarter of 2016, profit of state-owned banks under pressure due to slow lending and a surge in NPLs.
On the other hand, state-owned banks certainly do not want profits plummeted. Therefore, profit is the main parameter used to assess the success shareholder management. Shareholders only want to see the dividends they receive continues to increase every year.
Credit should go down, NPLs may rise, but profits should continue to grow, so the law. If profits plummeted, shareholders may replace bank management. Then, how to overcome the bank's management complicated situation like this? One strategy employed is playing a lending rates and deposit rates.
Because it can not rely on the volume of lending, the bank raised the profit margin. How, by lowering deposit rates as soon as possible and lower the loan interest as late as possible.
As the economic downturn and low inflation, during the first quarter of 2016, Bank Indonesia imposed a loose monetary policy, which means interest rates are on a downward trend.
Based on data from the FSA, the average interest rates on term deposits 1 month fell 28 basis points (bp) from 7.60 percent at the end of December 2015 to 7.32 percent at the end of February 2016.
However, during the same period, the average interest rates on working capital loans only fell 6 bps from 12.46 percent to 12.40 percent.
With this strategy, the bank can maintain the net interest margin (net interest margin / NIM) remained stable.
Not all banks increase the interest margin. Some banks take other strategies for securing such profit encourage fee-based income or revenue services and services beyond the flower.
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