State banks record poor returns on assets, equities<\/p>\n
JAKARTA (JP): The rate of return on assets and equities at
\nIndonesia's state-owned banks were the lowest in all of Asia, a
\nvisiting British expert says.<\/p>\n
Robin Monro-Davies, a managing director of the London-based
\nInternational Banking Credit Analysis (IBCA) credit rating
\nagency, told a business luncheon here on Tuesday that his agency
\nhas found out that Indonesia's private banks had a better
\nperformance than state banks.<\/p>\n
\"Indonesia's private banks ranked the fourth in Asia after
\nthose the Philippines, Thailand, Hong Kong and Singapore,\" he
\nsaid.<\/p>\n
He said that according to IBCA's studies, the average rate of
\nIndonesian state banks' returns on assets steadily declined to
\n0.28 percent in 1992. This fell from 0.33 percent in 1991 and
\n0.66 percent in 1990, while the average rate of returns on assets
\nof private banks fell to 1.59 percent from 1.18 percent and 0.96
\npercent.<\/p>\n
The 1993 figures are not yet available.<\/p>\n
He said that banks in the Philippines posted the highest
\nrecord in the rate of return on assets at 2.28 percent, followed
\nby Hong Kong with 1.47 percent and Thailand with 1,44 percent,
\nSingapore with 1.01 percent and Taiwan with 0.55 percent.<\/p>\n
Monro-Davies said that Indonesian state banks also recorded
\nthe lowest level in the rates of return on equity with an average
\nof 8.41 percent in 1992, as compared to 15.11 percent in 1991 and
\n26.46 percent in 1990.<\/p>\n
The agency gave better marks to Indonesian private banks with
\nan average rate of 12.30 percent in 1992 and 10.89 percent in
\n1991.<\/p>\n
Philippines banks posted a slight decline in their average
\nrate of return on equity to 24.81 percent in 1992 from 28.96
\npercent in 1991, followed by Hong Kong which recorded an increase
\nto 22.83 percent from 21.41 percent, Thailand with 20.73 percent
\nfrom 15.85 percent, in Taiwan with 17.01 percent from 12.80
\npercent, and Malaysia with 12.09 percent from 10.69 percent. The
\naverage rate of Singapore banks declined to 9.94 percent from
\n10.30 percent.<\/p>\n
Uncertainty<\/p>\n
Monro-Davies said that the poor returns of Indonesian banks
\nhave been partly due to the uncertain situation of the Indonesian
\nbanking industry.<\/p>\n
\"I have no detailed analysis on the Indonesian banks but this
\nsort of case usually happens to banks which are open to political
\ninfluence where there is not adequate profit motivation,\" he told
\nThe Jakarta Post.<\/p>\n
In addition, a lack of transparency and disclosure of
\ninformation on Indonesian banks' performances might lead to the
\nbad situation.<\/p>\n
The existing non-performing loans held by the country's state
\nbanks are a good examples of what happens in the absence of the
\nproper supervision and transparency in the banking industry, he
\npointed out.<\/p>\n
\"But, I believe, many changes have been made now by your
\ngovernment to improve the situation,\" he said, commenting on the
\ncountry's decision to set up a new credit rating agency PT
\nPemeringkat Efek Indonesia (Pefindo).<\/p>\n
Responding to the poor assessment of the Indonesian banking
\nsystem in Standard & Poor's, a New York-based credit rating
\nagency, he said that the evaluation has been made correctly by
\nprofessionals who knew a lot about the Indonesian banking
\nsituation.<\/p>\n
\"What they have said was not wrong. But I don't think that it
\nwill have a detrimental effect on the Indonesian banks,\" he said.<\/p>\n
Standard & Poor's reported in its recent ASEAN Banking Profile
\nthat Indonesia's banking system is facing a period of financial
\nstress partly due to the banking reforms introduced by the
\ngovernment in the late 1980s.<\/p>\n
The agency gave worst marks on the performance of the
\ncountry's state banks, in what it said was a high risk
\nenvironment caused by high non-performing loans, high loan
\nconcentration and low capitalization.<\/p>\n
Chairman of the Stock Market Supervisory Board (Bapepam),
\nBacelius Ruru, said Tuesday that the establishment of Indonesia's
\nfirst credit rating agency is part of the government's efforts to
\nimprove the banking climate in the country. The agency is
\nassigned to assess the issuers from their bond and commercial
\npapers offered in the secondary markets. (fhp)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/state-banks-record-poor-returns-on-assets-equities-1447893297",
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