Indonesia Banking Industry: Outlook and Opportunities Assessment

This document contains: Report published by Asian Banker Research

DESCRIPTION ABOUT THIS DOCUMENT

Data and risk analysis for the planning and decision making needs of all investors and service providers building their business strategy for Indonesia's financial services industry today.

Indonesia is considered to be one of the most open markets for foreign investors in Asia Pacific, but also viewed as one of the least consolidated. Based on the considerable demand for a greater understanding of the trends affecting the Indonesian banking industry today, The Asian Banker is publishing a comprehensive report that is of great importance to all decision makers assessing the banks in Indonesia.

The report reflects the publisher's extensive and continued interviews with top regulators, CEOs and senior executives from the full cross-section of banks in the country, as well as investors, suppliers and consultants who do business with Indonesian banks. The report is supported by a strong set of data, charts and tables that provide conceptual insights, as well as hard-nosed facts that decision makers can work into their own assessments.

The report provides a strong big picture perspective of the key themes driving Indonesia?s banking industry today, supported by strong operational and business level observations that provides the reader with an idea of the tactical issues they will need to deal with when doing business in Indonesia.

The Asian Banker Industry Assessment Report 2006 on Indonesia assesses the profile and prospects of the Indonesian banking industry, helps you understand the drivers affecting the growth potential of the banking industry in the country and learn the banks competitive positioning relative to each other. SHOW LESS READ MORE >

All data comprise latest available figures, (e) expected - (f) forecast

Macro-Economic Environment
- Indonesia?s economic growth prospects, 2001-2007(f)
- Bank lending growth - GDP growth - Inflation, 2001-2007(f)
- Consumer sentiment, 2003-2007
- Regional comparison of household financial assets mix
- Regional comparison of credit depth an credit growth
- Financial depth and efficiency in Indonesia?s financial sector

Macro-Banking Environment
- Industry outlook 2006 ? Indonesia vs. Asia Pacific countries
- Financial intermediation trends in Indonesia, 2000-2006(e)
- Interest rate developments, 2004-2006(e)
- Stock market performance ? Composite vs. Finance Index, 2001-2005
- Revenue growth vs. Growth in market capitalization 2001-2005
- Asset creation vs. Deposit generation, 2002-2005
- Banks? net interest margin forecasts, 2001-2007(f)
- Profitability of market players and industry, 2001-2007(f)
- Market concentration and consolidation

Business Composition and Focus
- Top 10 revenue generators among Indonesian banks 2005-2007(f)
- Fee income comparison between banks
- The Asian Banker Perception survey on key strategies in retail banking
- Cost efficiency vs. profitability
- Profile of Indonesian banks? asset quality, 2002-2006(e)
- Bank credit growth
- Banks? capital raising and IPO prospects
- Acquisition deals (2004-2005) and investor prospects
- Microfinancing ? Bank Danamon vs. Bank Rakyat Indonesia
- Level of preparedness of Indonesian banking sector for pandemic
- Communication strategies for pandemic

Distribution and Penetration
- Branch penetration in Indonesia and peer countries
- Branch growth of Indonesian banks, 2002-2007(f)
- The Asian Banker Perception survey on branch strategy
- Fee income generation of banks on branch level
- ATM penetration in Indonesia and peer countries
- ATM growth of Indonesian banks, 2002-2007(f)
- Bank card growth with regards to total issuance and transaction value

Major Challenges, Key Concerns and Conclusions

Appendix: Indonesia Banking Data Series 2001-2005
- Basic statistical data
- Macro data (GDP, Population, Population age distribution, GDP/Capita)
- Price indices (Consumer and producer price indices)
- Monetary statistics (Narrow money (M1), Money supply (M2), Broad money (M3)
- Inflation and unemployment (Inflation, Labour force, Unemployment, Exchange rate)

Household demographics
- Number of households (HHs), % urban population, HH income, HH income/GD(%), Number of HHs by income band, Total HH borrowings, HH borrowings/HH income, HH borrowings/GDP (%)
- Gross domestic savings, Gross domestic savings/GDP (%)
- Poverty (Population in poverty, Income ratio of the highest 20% to the lowest 20%, Gini coefficient)

Banking industry profile
- GDP from finance (GDP, GDP contribution from finance)
- Number of financial institutions by category, Number of inhabitants: per bank, per commercial bank, per branch
- Deposits in banks (Current deposits, Certificate of deposits, Term deposits, Others)
- Average interest rates (Deposits: Savings, Time; Loans and discounts)

Retail distribution
- ATMs (Number of networks, Number of machines, ATM penetration, Value of ATM transactions, Average value per transaction, Volume of transactions, Number of transactions/person)
- EFTPOS (Number of networks, Number of terminals, EFTPOS penetration, Value of EFTPOS transactions, Average value per transaction, Volume of transactions, Number of transactions/person)
- Bank branches (Number of branches, Branch penetration)
- Infrastructure penetration rates (Fixed-line telephone, Mobile phones, Personal computers, Internet) Payment systems
- Cash (Cash penetration, Cash penetration as a % of GDP)
- Credit cards (Number of cards, card penetration, Value of transactions (US$ millions, per card, per person), Billing as a % of HH income, Volume of transactions, Average value/transaction)
- Debit cards (Number of cards, card penetration, Value of transactions (US$ millions, per card, per person), Volume of transactions, Average value/transaction)
- Cheques (Value of transactions, Volume of transactions)

Financial profile
- Balance sheet (Total assets, Loans, Deposits, Equity, Non-performing loans, NPLs as a % of total loans, NPLs as a % of GDP)
- Income statement (Net interest revenue, Other operating income, Overheads, Profits, Tier-1 capital)
- Ratios (Operations: Return on average equity, Return on average assets, Cost-to-income ratio, Net interest margins; Liquidity: Net loans- to-total assets, Net loans-to-deposits; Capital: Equity-to-total assets)

Chapter 1. Macroeconomic Environment
This chapter discusses the economic fundamentals that are relevant to the banking industry in Indonesia today. The report looks at Indonesia?s GDP growth prospects, credit depth, efficiency of the financial system and Indonesian consumer sentiment to evaluate the prospects for bank lending growth. It identifies the sources of future growth as customer sophistication and the revenue mix of banks evolve.

Chapter 2. Macro-Banking Environment
The second chapter provides an overview of the financial intermediation business, both at the institutional level as well as balance sheet levels of specific banks. Based on the strategies communicated to us by leading CEOs, the report profiles how banks in Indonesia will play out with the liquidity crunch and interest rate rise in the market today. it uses the charts collated to draw a picture of motivations driving banks to differentiate themselves in the marketplace and compete for market share. It discusses ways in which both investors and service providers should assess the institutional capability of Indonesian banks to focus on profit.

Chapter 3. Business Composition and Operational Focus
This chapter is designed to give readers an insight into the business composition of the banks themselves, down to the product level. The report assesses how they will develop a good mix of businesses with good tenures to strengthen their balance sheets. The report also looks at the balance sheets and work out how the potential for fee-based income as well as strong credit growth will play out. Based on the publisher's interviews with leading figures in the Indonesian banking industry, it also evaluates and segments the types of banks which are likely to come to market for capital rising, and also the potential impact of foreign players on the market.

Chapter 4. Distribution and Penetration
In this chapter the report looks at the state and future of channel infrastructure, and examine the different strategies and technology modernisation programs that are undertaken at branches and with the ATM networks. It looks into the current state of fee generation capabilities of branches to answer the question why is there a gap between aspiration and implementation. It examines Indonesia’s promising payment card market, and investigate why having a strong credit card proposition is not enough to succeed. ATM, cards and device manufacturers will find this chapter and the data in the appendices useful in making their own assessment for market entry.

Chapter 5-7. Major challenges, Key Concerns and Conclusions
We look into the major challenges for the banking industry as a whole, and also for foreign and domestic players, in the wake of banking consolidation and the transformation of domestic banks into modern sales and customer orientated financial institutions. By identifying key areas of concern in risk and asset management, performance and operations, capital rising activities, distribution and penetration channels, It brings together publisher's key findings in a unified and comprehensive view for business applications and strategy discussions for the benefit of investors, players in the marketplace, as well as service providers and consultants wanting to serve the Indonesian banks. Readers will find the publisher's key conclusions useful for their business decision making needs.

8 Appendix: Indonesia Banking Data Series 2001-2005
The report is supported by a full range of latest available primary data at the operational and business levels that decision makers will need for making their own assessments. the report also makes the publisher's own projections for the benefit of readers who need data for planning purposes. Purchasers of the report may have access to the pulbihser's research analysts on the use of this rich compendium of data.