Panin aims to boost retail loans: Senior executive
Panin aims to boost retail loans: Senior executive
The Jakarta Post
Jakarta
Bank Panin is among the few banks in the country that survived
the banking crisis in the late 1990s without the government's
costly bail-out scheme, called the bank recapitalization program.
Roosniati Salihin, the bank's deputy president, shared her
thoughts with The Jakarta Post's Dadan Wijaksana in a recent
interview on the country's banking sector in general, as well as
Panin's business plans for the future. The following is an
excerpt of the interview:
Question (Q): The restructuring process of the banking sector has
been going on for almost six years now. In your opinion, what
progress has been made over these years and what are the
challenges the sector is currently facing?
Answer (A): In line with the improvement in our macroeconomic
indicators, I'd say the banking sector has also shown signs of
recovery. You can say that we now have much more breathing space
than we did previously.
We have now a capital adequacy ratio (CAR) of about 20 percent
on average, much better than the minus 15 percent back during the
crisis. The non-performing loan (NPL) ratios are also improving.
Those are the basic measures to determine a bank's financial
health. So overall, I'd say the current conditions are
encouraging.
Q: The challenges?
A: There are still plenty of them. Next year, we're going to have
to implement the Basel accord principles, and then there will
also the so-called Indonesian banking architecture -- which will
determine the benchmark of a bank's performance -- to be issued
by the central bank.
But, of course, the biggest challenge of all is our private
sector, which has been slow in its restructuring process. The
condition of the private sector is improving, but slowly. This is
why at the moment banks are giving out more consumer loans than
loans to the private sector.
Q: What about the demand? Is there really demand for loans from
the private sector?
A: It's beginning to improve, but not that significantly. While
most old players are still restructuring their debts inherited
from the crisis, we do not see new players developing.
But demand is there. The problem is, I think, most players are
still considered "unbankable" because the risk remains too high.
The challenge for the banking sector is how to make more loans
other than consumer loans, like to manufacturers and other lines
of business.
Q: What is Panin's lending composition currently?
A: Today, lending to consumers and small and medium-sized
enterprises (SMEs) represents about 30 percent of our total
credits, and we have set a target of increasing that figure to 50
percent in the next three to five years.
Most of the credits are for houses and cars.
These consumer credits are considered attractive by banks
because of their high returns. At our bank for instance, the NPL
for consumer credits stands at less than 1 percent.
Q: Can you elaborate more on the Basel accord II?
A: Actually, the central bank has been communicating this
periodically to us since last year.
From the banking sector, we fully support the policy as it
would turn us into better bankers, as the principles were first
meant to.
In principle, the implementation of this policy aims to make
banks more sensitive to market risks, to operational risks and
credit risks.
Q: Going back to the crisis, Panin managed to survive. Can you
tell us why?
A: Well, the bank has been known as a conservative one, not just
now but for a long time. Our management, even before the crisis
when most other banks were generously extending huge amounts of
loans, Panin set conservative growth targets. We never hurry in
anything that we do, not without sound calculations. This was
helpful. Had we done things differently, I do not think things
would have been the same.
Also, we have this policy of trying to surpass everything that
the regulator requires us to do in running our business. With the
CAR, for instance, we always try to double whatever the minimum
figure that Bank Indonesia has set.
And our top level management, or directors, during the crisis
were mostly professional people who had been working together at
the bank for between 10 and 15 years. So, I guess, the directors,
and the staff, of course, were very used to working as a team.
We were included among the country's top 10 banks when the
crisis struck. And we were the only bank in that group that
managed to survive without the recapitalization program, which is
quite an achievement.
Aside from all that, we also had support from the ANZ Banking
Group to help us get through all the problems. In 1999, ANZ
bought a some 10 percent stake in Panin. They were giving us
technical assistance, and also sent a director here in a transfer
of knowledge process. They have now raised their ownership in the
bank to about 29 percent.
Panin's financial statements
----------------------------------------------------------
2003* 2002
------------------------------------------------------------
CAR (%) 34.6 32.9
NPLs Gross (%) 15.6 16.4
NPLs Net (%) 0.0 6.9
LDR (%) 71.6 41.4
Profit (Rp) 196 billion 16.8 billion
---------------------------------------------------
* As of June
CAR : Capital Adequacy Ratio
NPLs: Non-performing loans
LDR : Loan to deposit ratio
Source: Panin Bank