Amid emerging giant banks competition, Bank Rakyat Indonesia
Most bankers ended 2011 with smiles on their faces. Although, the financial audit has not finished, they are optimist that the year’s performance will be as good as the previous years. They believe that they will make great profit. And among the bankers, the banker from BRI is the one having biggest grin.
BRI’s profit in 2011 is believed to have grown fantastically. Sofyan Basir, BRI’s ‘captain’ told journalists in the mid of January that he was optimistic of the bank’s ability to gain profit up to Rp 20 trillion. When BRI reaches that amount of profit, it means that the bank’s profit has increased 74%. Then, it can be guaranteed that it has been grown higher than the industrial profit. In other words, BRI does not only maintain its position as the biggest profit maker bank but also as a bank having wider and wider segment.
Many analysts expect the BRI can make profits of up to Rp15 trillion. When BRI reaches that amount of profit, it means that the bank’s profit has increased 40%. Then, it can be guaranteed that it has been grown higher than the industrial profit. In other words, BRI does not only maintain its position as the biggest profit maker bank but also as a bank having wider and wider segment. In 2010, banking profit reached Rp 57.31 trillion, and 20% of it was from BRI’s profit.
Bankers of other big banks should admit the beauty of BRI’s performance, especially Bank Negara Indonesia (BNI) whose asset belongings have been overtaken by BRI since 2007 and Bank Central Asia (BCA) which has been overtaken 2008. Seeing the growth of BRI’s asset in the last four years that is, on average, 25.12% per year, so BCA and BNI have to restrain first when they want to overtake BRI. Unless, these two banks make a strategic action by acquiring other major banks.
Bank Mandiri as the biggest bank in Indonesia
Besides, BRI has an ambitious target that is to reach Rp 1,000 trillion in 2017. When Infobank asked a confirmation on the case, Sofyan Basir did not deny it. The man who is the former of Bank Bukopin’s general manager even said that he was sure that target can be fulfilled in 2017. “It can be achieved five years from now,” he told Darto Wiryosukarto from Infobank last month.
It is clear that the ambitious target of Bank Mandiri and BRI seems like a competition between two ‘red plate banks.’ Besides, there are still BCA, BNI, and Bank CIMB Niaga which are considered to be the most prominent competitors for Bank Mandiri and BRI in regional market.
In the field of transactional banking, BCA is a bank retail which is advanced in term of its electronic delivery channel. Although the bank’s offices networks are only around 900 or less than networks of BRI or Mandiri, which are 6,542 and 1,430, but BCA is still capable of being ruler of the market (market leader), especially for low-cost fund savings.
Jahja Setiaatmadja, the president director of BCA, said that he did not want to comment on an ambitious steps taken by BRI and Bank Mandiri. When he was questioned over the chance of the achievement assets summed of Rp 1,000 trillion, Jahja calculated it could be reached in 2018. "In the next five years, BCA’s assets will be estimated around Rp 750 trillion. And Rp 1000 trillion assets will be achieved by 2018," he told Dwi Setiawati from Infobank last months.
According to Jahja, the growth of gross domestic product (GDP) will greatly affect banking business growth. Jahja is optimistic, when GDP is able to grow 8.5% per year, the plan to achieve Rp 1,000 trillion of assets can be manifest more quickly.
Then, how about BNI, which has ever been nicknamed as the largest bank in Indonesia
According to a BNI internal source, after the tangled case of L/C fictitious Rp1.7 trillion in 2004, BNI seems to lose courage. According to Infobank Research Bureau data, among the 10 biggest banks, the average asset growth of BNI on the last five years is relatively low. However, in recent years the red plate bank is starting to be aggressive mainly to boost consumer banking market by recruiting experienced bankers from other banks. Last year, the business contribution from consumers in BNI is 17.9%, while the rest is corporation.
According to Gatot M Suwondo, the president director of BNI, the bank focuses on strengthening the fundamental finance and changing the business approach. "From product to customer centrix, centrix customer operating model is built and since 2010 the implementation process has been already underway. We expect it will fully be implemented in 2014," he told Jennar Siantang from Infobank via short message service last January.
Gatot added that the bank now having 1675 network outlets would focus on financing the superior industry, with value chain to develop consumer business and retail banking.
A main competitor of the top chart banks is CIMB Niaga. In terms of size, the bank ranks the fifth and its assets are far below Bank Mandiri or BRI with hundreds of trillion rupiahs gap. However, people should not take those facts for granted since CIMB group of Malaysia
Another importance, in addition to having experience in regional area with its vision of becoming the most valued universal banking in Southeast Asia, CIMB Group is a business organization that aggressively acquiring other companies. CIMB Bank has opened branches in Singapore and has acquired banks in Thailand , Cambodia
If among the existing areas Indonesian market has the best prospect, the parents company surely has a serious development plan for CIMB Niaga. Moreover, CIMB Group has targeted the increase in contribution of Bank CIMB Niaga in Indonesia
It is true indeed that there are no figures of the amount of assets that the bank wants to achieve. However, when Infobank was discussing with several directors of Bank CIMB Niaga in 2010, it came out a desire that the bank wanted to become the fourth largest bank in Indonesia
If relying on organic growth, CIMB Niaga needs more than 10 years to overtake BNI. However, if CIMB Niaga acquires banks with assets more than Rp 100 trillion, CIMB Niaga's desire to overtake BNI will be achieved in a short time. Moreover, if the merger plan between CIMB Niaga with Bank International Indonesia (BII)—as a last year’s growing issue—comes true. The merger discourse is very likely considering the BII is a bank-owned by Maybank, both of the banks come from Malaysia
Arwin Rashid, the president director of Bank CIMB Niaga, was reluctant to respond to the discourse. But, when Infobank asked him couple time ago, he said the bank was possible for acquiring. “We don’t close the possibility for Bank CIMB Niaga to make acquisitions (over other banks) as a step of acquisition itself has become a behavioral CIMB Group to expand," he said.
Although only BRI puts a clear target on the attainment value of assets, business plans of those giant banks certainly illustrate the growth of assets to Rp 1,000 trillion. The question is: which bank can reach Rp 1,000 trillion of assets first?
According to calculations done by Infobank Research Bureau based on the assumption of the asset growth last four years, BRI will become the first bank which reaches Rp 1,000 trillion assets. BRI can accomplish assets worth Rp 1,232.83 trillion at the end of 2016, or a year faster than the business plan created by BRI.
In the same year, Bank Mandiri’s assets will manage through Rp 1,002.41 trillion. For BCA, the achievement of Rp 1,000 trillion of assets can only be achieved by 2019. Meanwhile, for BNI and Bank Niaga, having assets of Rp 1,000 trillion is difficult to occur before 2020 if only relying on organic growth.
What power possessed by BRI so that it becomes the fastest bank heading to Rp 1,000 trillion? Corporate loans accounted 20% of the bank’s credit. However, the segments of micro credit, small and medium enterprises (UMKM) which offer more attractive margins will still be the land nurturing productive assets of BRI.
This kind of segments is indeed being contended among other competitors such as Bank Danamon, Bank Tabungan Pensiunan Nasional (BPTN), Bank Pundi, Bank Mega Syariah, and Bank Mandiri. Recenty, Bank CIMB Niaga also joins the rivalry.
However, BRI has been strong in this segment. Its competitors may innovate and expand aggressively in micro businesses. Yet, they cannot easily penetrate the blockade made by BRI's widespread network, comprising more than 40,000 permanent employees. Up to the end of the last year, BRI has had 424 branches office, 480 auxiliary branches offices, 4,766 BRI units, 854 cash offices, plus 1,195 Teras BRI.
Even if its competitors join forces to besiege BRI, the "king" of micro banking still has the "power within." That is the power of cheap funds to lower lending rates. It should be noted, the weakness of banks focusing on the micro market is in the race for low-cost funds such as savings. If BRI’s mortgages interest rates are lower than those offered by its competitors do, they will be overwhelmed.
The structure of third party funds of BRI has been stronger since the bank entered the consumer banking business in 2007. BRI’s strategy in consumer banking is not only strengthening the bank’s liability, but also consumer loans such as housing loans and credit cards. Yet, based on the portfolios, the two items are still below its competitors’ products.
Recently, BRI has developed a new item which is in transactional banking business. BCA and Bank Mandiri are banks who are most serious working on the payment business. They should consider BRI as the tough rival.
Now, BCA is still in the forefront with the biggest income in electronic transactions. The same case occurs to Bank Mandiri which is serious in strengthening the infrastructure of payment business with budgeted capital expenditure payment of up to US$ 100 million per year.
However, BRI has bigger and broader customers bases. It becomes a nice point for developing a payment business. "My goal is to guarantee payments. I want to change people’s dependence on BCA. The bank has only had 11 million customers. My (BRI’s) customers are 25 million. Someday, people will flock to ATM BCA machine, but there are ATM BRI cards inside their wallets,” said Sofyan Basir.
Customers’ strength is what has driven BRI to launch electronic money (e-money). The money will be a retail payment instrument in the future. BCA has Flazz cards and Bank Mandiri has e-Toll cards. BRI has also had BRIZZI cards which circulated up to 95 thousand cards last year. BRIZZI cards are targeted to have circulated up to 250 thousand by the end of this year.
BRI ‘s steps to widen its business domains are contrary to what its competitors do. For example in term of business payment or consumer banking. The same case also occurs to the bank’s old business such as UMKM and corporate banking. However, BRI’s achievements in the two domains make the bank to be optimistic in gaining assets amounting Rp 1000 trillion.
BRI’s target to boost its assets up to Rp 1,000 trillion has surprised many competitors. However, there is more astonishing plan BRI wanting to do. Having successfully acquired Agro Bank and Bank Jasa Arta (later changed to BRI Syariah) and failed to acquire Bukopin, BRI secretly desires to go global. In the future, the bank plans to buy banks in Vietnam or the Philippines
If BRI can make the plan come true, the bank will create a greater breakthrough than Bank Mandiri desiring to open offices in neighbor countries such as Malaysia
BRI is aware that more stringent competition will be faced in the regional market. Yet, the bank is optimistic. Considering the bank’s long experience in micro banking, the bank indeed deserves to be in that state.
Appreciable ambition to explore overseas markets such as those BRI and Bank Mandiri are planning to do needs surely to be supported. Therefore, Indonesia
While striving to manifest their magnificent ideals, BRI and Bank Mandiri should also strive to be leading banks in meeting the needs of regulators and the people. The needs are to improve efficiency and offer cheaper interest rates to spur the country’s economic growth.
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