Bank Danamon Indonesia Tbk PT : Danamon Announces IDR 2.5 Trillion NPAT in The First Nine Months of 2016

NPAT rose 33% Year-on-Year on the Back of Higher Fee-Based Income, Lower Operational Expenses and Cost of Credit

Jakarta, 25 October 2016. PT Bank Danamon Indonesia, Tbk. ('Danamon') today announced a net profit after tax of IDR 2.5 trillion for the first nine months of 2016, which is a 33% growth as compared to IDR 1.8 trillion in the same period of 2015.

'Danamon managed to improve productivity against the backdrop of a soft economy that led to lower demand for loans. The Bank's resilience is a result of its strong fundamentals and transformation initiatives that were started to be implemented last year. We were also able to manage operational expenses and cost of credit better than last year,' said Chief Financial Officer and Director of Danamon, Vera Eve Lim.
Vera added that Danamon recorded a 9% growth in fee-based income as a contributor to its profit in the first nine months of 2016. 'The increase in fee-based income underscores Danamon's mounting efforts to provide value added products and services.'

Profit growth highlights improved efficiency
Pre-Provision Operating Profit (PPOP) grew by 13% to IDR 6.8 trillion in the first nine months of 2016 as compared to the same period last year. Cost-to-income ratio for the first nine months of 2016 was 49.1% as compared to 53.7% in the first nine months of 2015, due to continuous efficiency improvements. Operating costs decreased by 6% to IDR 6.5 trillion in the first nine months of 2016 as compared to the same period in 2015.

Growth in SME despite a still weak overall demand
Loans to the SME Banking segment increased 6% to IDR 23.8 trillion from IDR 22.6 trillion in the same period last year. Meanwhile, the Wholesale Banking portfolio, consisting of commercial and corporate loans, and marketable securities related to Trade Finance, was flat as compared with the prior year.

Micro Banking loans, through Danamon Simpan Pinjam (DSP), declined 29% from the prior year to IDR 11.4 trillion.

Adira Finance continued to be impacted by weak automotive industry sales and booked an 8% year-on-year decrease in loans to IDR 43.8 trillion at the end of September 2016.

Total loans declined by 9% to IDR 121.6 trillion in the first nine months of 2016 from IDR 133.6 trillion at the end of the same period last year.

Adequate liquidity
At the end of September 2016, Danamon's Current and Savings Accounts (CASA) balances decreased by 13% to IDR 45.6 trillion from IDR 52.6 trillion at the end of September 2015 due to the release of high cost CASA accounts. The quality of CASA funding has improved in line with Danamon's strategy to focus on granular third party funds. Meanwhile, time deposits decreased by 8% to IDR 58.2 trillion.

Danamon's regulatory loan-to-total funding ratio (LFR) stood at 91.7% compared to 91.1% in the same period a year ago. Danamon's LFR remained below Bank Indonesia's threshold. Despite tighter liquidity in the overall banking system, Danamon managed to maintain its LFR at the targeted level.

Danamon's consolidated capital adequacy ratio (CAR) stood at 21.5%, while bank only CAR was at 22.8%.

Fee-based income grew 9% year-on-year
Danamon recorded a 9% growth in fee income compared to the first nine month of 2015 to IDR 3.0 trillion. The growth in fee-based income was supported by Adira Insurance, which grew by 2% to IDR 656 billion, cash management, which grew by 14% to IDR 244 billion, and bancassurance, which grew by 19% to IDR 203 billion.

Asset quality is expected to improve
'Gross non-performing loans stood at 3.5%, a 50 bps increase year-on-year, which remained below the regulatory limit of 5%. The decline in the loan denominator contributed to the increase in the non-performing loans ratio,' said Vera, adding that the bank is constantly aiming to improve its asset quality through strict enforcement of risk assessment procedures, disciplined collection and recovery of debts.

The Bank expects asset quality to improve next year. Cost of credit has come down by 4% from IDR 3.5 trillion in the first nine month of 2015 to IDR 3.4 trillion in the same period this year.

Recent Developments
Recent awards received by Danamon include 'Indonesia's 1st Best Local Cash Management Bank in the Small Size of Annual Sales Turnover' from Asiamoney during the Asiamoney Summer Awards Dinner 2016. For its digital services, Danamon was also awarded as the Top 3 Digital Innovation for the BUKU III Banking category at Warta Ekonomi's Indonesia Digital Innovation for Banking Award 2016. In addition, Danamon recently received the Social Business Innovation Award 2016 in the Private Bank category from Warta Ekonomi. The award is recognition for the traditional market revitalization program run by Yayasan Danamon Peduli.

About Danamon:
PT Bank Danamon Indonesia, Tbk. ('Danamon') was established in 1956 and as of September 30, 2016 operates a network of around 1,900 including among others conventional branches, Danamon Simpan Pinjam (DSP) and Syariah units as well as its subsidiaries branches. As of September 30, 2016, Danamon provides its customers with more than 60,000 ATMs, including through its association with ATM Bersama, PRIMA, and ALTO, in all 34 provinces in Indonesia. Danamon manages around IDR 175 trillion assets as of 30 September 2016.

Danamon is also the sole license holder of Manchester United cards in Indonesia, and the issuer of Manchester United ATM/Debit cards and credit cards.

PT Adira Dinamika Multi Finance, Tbk. (Adira Finance), the automotive and durable goods financing subsidiary of Danamon, operates an extensive branch network in more than 260 cities in Indonesia. Danamon is also the majority owner of PT Asuransi Adira Dinamika (Adira Insurance), a general insurance company and PT Adira Quantum Multifinance (Adira Kredit), a durable goods financing company.

As of September 30, 2016, Danamon was 67.37% owned by Asia Financial (Indonesia) Pte. Ltd., 6.58% owned by JPMCB-Franklin Templeton Investment Funds and 26.05% owned by the Public.
For further information, please visit Danamon's corporate website at: www.danamon.co.id.