Danamon Announces Full Year 2014 Financial Results: LDR Improved to 92.6%; Consolidated CAR at 17.9%; Normalized* NPAT at IDR3.453 Trillion

29 January 2015

PT Bank Danamon Indonesia, Tbk. (“Danamon”) today announces its 2014 full year financial results, showing an improved regulatory Loan to Deposit Ratio (LDR) to 92.6%, where total loans grew by 3% to IDR 139 trillion, while normalized* consolidated net profit after tax (NPAT) reached IDR 3.453 trillion, as net interest income was booked at IDR 13.7 trillion at the end of 2014. Danamon’s reported consolidated net profit after tax (NPAT) was at IDR 2.604 trillion in 2014, and Danamon’s consolidated Capital Adequacy Ratio (CAR) stood at 17.9%.

“2014 presented a slowed growth in Indonesian economy, as oil prices fell along with the prices of other commodities, coupled with the fuel price hike and an increase in Bank Indonesia’s benchmark interest rate to 7.75%. These conditions were reflected in the banking industry with softened lending growth and compounded with the rise in interest rate, which provided a challenge for the banking industry to maintain profitability at a satisfactory level. Amid these backdrops, Danamon has maintained a good foundation for future growth with a healthy loan-to-deposit ratio and ample capitalization,” said Henry Ho, Danamon’s President Director.

Danamon’s loans to micro enterprises through Danamon Simpan Pinjam (DSP) were at IDR 19 trillion at the end of 2014, while loans to small and medium enterprises (SME) were at IDR 20 trillion, as Danamon’s market share in the SME sector improved from 6% in December 2013 to 6.2% in December 2014. Altogether, loans to micro, small and medium enterprises (MSME) segment constituted 28% of Danamon’s total loans. Meanwhile, loans to the commercial segment were at IDR 15 trillion at the end of 2014, while loans to the corporate segment were at IDR 17.5 trillion. In December 2014, Danamon’s trade finance recorded a 26% growth compared to the previous year to IDR 24.8 trillion.

In December 2014, automotive loans through Adira Finance were recorded at IDR 49.6 trillion, a 3% growth compared to December 2013, in line with slower growth and increased competition in the auto financing industry.

In terms of asset quality, gross non-performing loans ratio remained at a manageable level at 2.3% at the end of 2014, while cost-of-credit ratio was at 2.8%.

“At the end of 2014, Danamon started to implement a number of initiatives to improve competitiveness and profitability with a focus on increasing productivity and customer service. These initiatives include remodeling Danamon’s micro lending business, characterized by more customer-centric approach as well as centralized and automated back office functions,” said Vera Eve Lim, Chief Financial Officer and Director, Danamon.

Danamon posted a solid growth in its current account and savings account (CASA), which grew by 10% compared to 2013 to IDR 58 trillion. This growth meant that CASA constituted 49% of Danamon’s customer deposits. Time deposit increased by 4% to IDR 60 trillion. All in all, Danamon’s total funding, which includes CASA, time deposit, and long term funding, grew by 4% year on year, amounting to IDR 146 trillion at the end of 2014.

As of the 31 December 2014, regulatory Loan-to-Deposit ratio (LDR) reached 92.6%, improving from 95.1% at the end of December 2013. Danamon’s consolidated Loan-to-Total Funding ratio stood at 85.9% at the end of December 2014 compared to 87.4% in the same period a year ago. Danamon’s consolidated capital adequacy ratio (CAR) stood at 17.9%, while standalone CAR is at 18.2% at the end of December 2014.

*Normalized NPAT is the figure before the application of the new OJK regulation (Circular Letter, No SE-06/D.05/2013 on Vehicle Insurance) on insurance fee impacting Adira Finance’s fee income recognition and before restructuring cost.