sharing session - Indonesia International Conference on Islamic

SHARING SESSION :
CAPITALIZING SYNERGY WITH PARENT COMPANY TO CREATE
SUSTAINABLE GROWTH IN BRI SYARIAH
By : Achmad Baiquni – CFO PT. Bank Rakyat Indonesia (Persero) Tbk
Surabaya, November 3rd, 2014
1
AGENDA
:
 Islamic Finance in Indonesia
 Islamic Finance in BRI :
o History
o Initial Phase : Challenges & Supports
o Building Synergy
o Strategy and Business Alignment
o Risk Management & Integrated Supervision
 Wrap-up
2
Islamic Finance in Indonesia
3
HISTORY
In 1998 Indonesia decided to convert from a conventional to a dual banking system. The dual banking
system is based on the 1998 Legal Act 10, which allows commercial banks to operate on sharia principles.
:
December 2001
Full Islamic Banks
1. Bank Muamalat Indonesia
2. Bank Syariah Mandiri (Fully converted
from conventional bank into Islamic bank
per November 1999
Conventional Banks with Islamic Banking
Full-Branches
1. Bank IFI
2. Bank BNI
3. Bank Jabar (BPD Jawa Barat)
Islamic Rural Banks (BPR Sharia)
Number of banks 81 BPR Sharia
36
35
2,554
2,564
34
34
35
34
34
34
3000
2500
2000
2,227
33
1500
1,702
32
31
31
998
1,477
1000
30
500
29
0
2009
2010
2011
# Banks
2012
2013
Jun-14
# Branches
4
PERFORMANCE
Asset (IDR Billion) – Market Share
Third Party Funds & Financing (IDR Billion) – Financing Deposit Ratio (FDR)
Jun-14
4.49%
244,209
2013
242,276
4.66%
:
2012
195,018
2011
2010
2009
145,467
97,519
66,090
3.14%
2.54%
3.83%
185,508
Jun-14
4.37%
183,534
2013
147,512
100%
147,505
115,415
2011
2009
100%
184,122
2012
2010
101%
188,063
89%
102,655
76,036
68,181
52,271
46,886
Third Party Funds
90%
90%
Financing
•
Sharia’s asset grows around 38% on average per year. This growth is higher than asset
growth in conventional banking. As a result, market share continue to grow.
•
The penetration of Islamic Financing still low, it has a lot of potential in the future.
However, the Financing to Deposit Ratio recorded a very high numbers. It provides a
challenges for sharia financing in Indonesia.
5
PERFORMANCE
Financial Ratios for Sharia Banking Only
95.5
84.5
Jun-14
:
95.87
82.16
2013
120.65
2012
1.09
Jun-14
1.58
1.82
2013
1.94
2.04
2012
76.35
2011
91.41
81.65
2011
2010
87.60
82.38
2010
FDR (%)
BOPO (%)
1.59
1.2
1.59
1.77
ROA (%)
NOM (%)
18.37
16.68
Jun-14
1.45
16.33
14.42
2013
18.04
2012
14.14
2011
19.64
16.63
2010
16.76
16.76
ST Mismatch (%)
CAR (%)
•
The liquidity for Sharia Banks (Bank Umum Sharia – BUS) is better compared with
liquidity in Sharia Business Unit and the banks are run efficiently.
•
On average, Sharia Banks have a strong capital ratio. Short Term Mismatch as a ratio of
liquidity still low but increase steadily
*) NOM : Net Operating Margin
**) BOPO : Operating Expense/Operating Income
6
Islamic Finance in BRI
7
HISTORY
BRISyariah was established on December 19, 2007, following the successful acquisition by PT
Bank Rakyat Indonesia (Persero) Tbk over PT Bank Jasa Arta (“BJA”)
•
BJA is a small, non-foreign exchange bank with total assets as of June 2007 IDR250.1
billion. The owners of Bank Jasa Arta was Panasia Group
•
It has 12 outlets consisting of 4 branch offices including head office, 6 sub branch
offices and 2 cash outlets, with 6,093 deposit accounts and 1,451 loan accounts
mostly in MSME.
Acquisition Rationale
•
Management of BRI has witnessed that sharia banks (“BUS”) show more remarkable growth
compare to sharia business unit (“UUS”). BRI has already been undertaking sharia business
through Sharia Business Unit since 2002, however, the asset growth is still below the
industry.
•
From the management review, the most suitable way to develop the sharia business of BRI
is by having a full sharia bank, separated from the conventional bank. However, to set up a
new sharia bank is relatively costly
•
Meanwhile, the regulation of the central bank that requires a bank to hold minimum capital
of IDR100 billion at the end of 2007 has forced some banks to be sold by the owners. This
condition provides an opportunity for BRI to acquire a bank and then converted to a sharia
bank (BRISyariah).
8
HISTORY
The business activity of BRISyariah was even stronger after the signing of the Separation Deed of
the Sharia Business Unit of BRI to merge into PT Bank BRISyariah (spin-off process)
•
BRISyariah officially performed its banking activity under Sharia principles on
November 17, 2008. It is owned by BRI 99,99%
•
On December 19, 2008, BRI spun-off its Shariah Business Unit and transferred
the assets to BRI Syariah. This strategy will enable the sharia business grow faster
as it will be more flexible and focus on development sharia products.
•
The signing that is of strategic value constitutes the real support of the holding
company to the operations of BRISyariah.
•
As of December 2013, it has 52 Branches, 199 Sub Branches, 8 Cash Outlets and
573 Sharia Services Outlets, 418 ATM, 14 Mobile ATM, 708 EDC
•
On December 27, 2013, BRISyariah was appointed to be a Foreign Exchange
Bank. This appointment not only reflects the high confidence of the regulators in
the Bank’s achievement during its growing phase but also grants a bright future
to expand the business
9
INITIAL PHASE : CHALLENGES
…human resources (culture), technology and networks were the main challenges to develop BRI
Syariah in its initial phase…
Networks
•
To be able to grow faster, BRI
Syariah need to have an
extensive access to its
customers which are spreaded
all over Indonesia
Technology
•
To achieve its new vision, to
be a leading modern retail
bank, BRI Syariah need to
empower its IT Capability
•
It needs a reliable and flexible
core banking system, disaster
recovery center and a group
of talented peole to develop
its IT.
BRI committed to support the capital needed by
BRISyariah to ensure that the Bank will survive
from its initial phase
Human Resources (Culture)
•
•
Different banking culture has
made the integration process
albeit difficult. The bank
required some energy to unite
culture
During the initial stages of
growth, BRISyariah applied the
method
of
pro-hire.
However, this method carries a
weakness
since
the
competitors taking similar step
as well which create possibility
of high turnover and slow
performance of the Bank
10
INITIAL PHASE : BRI’s SUPPORT & SYNERGY
…not only committed to strengthen the Bank’s capital, BRI also build the synergies to overcome
the initial challenges faced by BRISyariah…
Networks
•
Since 2011, BRI and BRI Syariah
has been building a concept of
office chanelling known as
Sharia Service Outlets.
•
This concept allows BRI’s
branches to offer sharia
services
within
the
conventional branch
•
This resources sharing will
enable BRI Syariah to operate
more efficient as well as to
have extensive networks using
BRI’s networks.
# of Sharia Service Outlets
573
593
Des 13
Jun 2014
338
26
Des 11
Des 12
11
INITIAL PHASE : BRI’s SUPPORT & SYNERGY
…not only committed to strengthen the Bank’s capital, BRI also build the synergies to overcome
the initial challenges faced by BRISyariah…
Technology
•
To ensure that BRI Syariah will implement a leading edge technology, BRI
assign its Head of IT Division as one of the Bank’s Commisioner
•
With the help from IT BRI, BRI Syariah develop its own core banking system
called SYIAR. IT Group continued to develop the system by enhancing its
existing Core Banking System “SYIAR”. SYIAR has an open platform and open
system architecture that gives more flexibility for further improvements
•
To limit talent shortage, IT Group recruited talented people through the
implementation of Information Technology Officer Program (ITOP). BRI
shared its Learning Center to educate this people .
IT Achievements
BRISyariah is the first and the only sharia bank in the world to offer mobile banking services in
4 online application markets (Android Google Play, Apple Application Store, Black Berry App
World, and Nokia Ovi Store) for which achievement the Bank received an award from the
Indonesian World Record Museum last year.
12
INITIAL PHASE : BRI’s SUPPORT & SYNERGY
…not only committed to strengthen the Bank’s capital, BRI also build the synergies to overcome
the initial challenges faced by BRISyariah…
Human Resources (Culture)
•
•
BRI assigned its best employees to fulfill
the managerial level in BRISyariah. It
helped the integration process run not
only faster but also smooth.
Mirroring to what BRI did, BRISyariah
designed a program named SODP (Sharia
Officer Development Program) tailored to
recruit fresh graduates from prominent
universities across the country to be
trained as potential sharia banking
people who are reliable and capable to
grow in line with their careers at
BRISyariah.
•
BRI shared its Learning Center to provide
complete training for new employees
•
To accelerate the learning curve, BRI
assigned several employees who have
specific knowledge (Treasury, wholesale
banking, etc) to BRISyariah
# of Employees
6,314
6,873
4,659
Des 12
Des 13
Jun 2014
13
COMMITMENT TO BUILD SYNERGY
…as controlling shareholders, BRI continue supporting BRI Syariah in each aspect of its business not
only in its initial phase, especially on sharing resources so BRI Syariah can operate more efficient…
ATM, BRILINK – Sticker BRIS
Uncommitted Credit Line
Disaster Recovery Center (DRC)
Sharia Service Outlets
Data Center
Synergy
Sharing Programmer - APPEL
Corporate Events
Corporate Social Responsibility
(CSR)
Website
14
STRATEGY & BUSINESS ALIGNMENT
…as controlling shareholders, BRI maintain Subsidiary Management Plan to align grand strategy
and business development between BRI and subsidiaries…
Communication
Subsidiaries Need
Coordinator
Business Alignment
Related Divisions in BRI
• Site visit
periodically
• Progress Report to
BoD
• Risk Management
Forum
• Presentation to
BoC
• Infrastructure
• Human resource
• Transfer
Knowledge
• Marketing &
Cross Selling, etc.
Director of Finance
BRI
Investment Services
Division
•
•
•
•
•
Corporate Secretary
Marketing Communication
Risk Management
IT
Networks & Services
Subsidiaries
• BRISyariah
• BRI Agro
• BRI Remittance
Strategy & Alignment
•
•
•
•
Business Plan aligment
Direction on strategy and business development to Subsidiaries
Alignment between grand strategy and subsidiaries’ strategy
Monitor on strategy implementation
15
RISK MANAGEMENT & INTEGRATED SUPERVISION
…as controlling shareholders, BRI empower its role to implement risk management more
comprehensive by building an integrated supervision and risk management…
PBI NO. 8/6/PBI/2006, SEBI NO. 13/24/DPNP, PBI NO. 15/12/PBI/2013
2008
• Quarterly Risk Profil Report
• Monthly Report on BMPK
• Monthly calculation on Risk
Weighted Asset
• Monthly
calculation
on
minimum capital required
2012
• Half Year Report on Risk Based
Bank Rating
• Half Year Report on Internal
Capital Adequacy Assessment
Process
• Alignment on policies and
regulation
• Give
asistance
on
scoring/rating
• Give
asistance
on
risk
management tools
• Implementation
of
Risk
Management Forum every
quarter
• Determination of risk limitation
2013 - 2014
• Give
assistance
on
compliance
• Give assistance on stress
testing
• Give assistance on market
risk and liquidity risk
management
• On the job training for
employees from subsidiaries
in BRI
16
PERFORMANCE
Asset (IDR Billion)
:
Deposit and Financing (IDR Billion)
2013
17,401
14,089
2012
Net Income (IDR Billion)
13,795
2013
14,167
2013
130
11,014
2012
11,403
102
2012
9,906
2011
2011
11,201
9,132
Deposits
2011
12
Financing
•
BRI Sharia’s asset grows around 24.64% per year on average. This growth is mainly
supported by growth in Financing around 24.56% per year on average.
•
As a result, Net Income reached IDR130 Billion at the end of 2013. It grows 27% from
2012
17
WRAP-UP
18
WRAP-UP
As a controlling shareholders, commitment to give financial support is a
must, especially in initial phase
:
Integration phase is crucial. Assigning best people to the subsidiary will help this
process running smoothly
Sharing resources is an important part to help subsidiary running its business more
efficient
Strategy and business alignment is a key to ensure that the subsidiary is on track with
holding’s grand strategy
Integrated risk management and supervision have to be implemented consistenly
19
THANK YOU
20