Bank Danamon Indonesia Tbk PT : Danamon Announces Year-on-Year NPAT Growth of 38% in its First Half 2016 Financial Results

SME loans Grew 5% Year-to-Date; Fee Income Grew 11% Year-on-Year

Jakarta, 26 July 2016. PT Bank Danamon Indonesia, Tbk. ('Danamon') today announced a net profit after tax of IDR 1.7 trillion in the first semester 2016 or a 38% increase compared to IDR 1.3 trillion a year earlier.

'Our productivity measures implemented last year have started to show their results, as reflected in the growth in net profit. This result validates Danamon's efforts to build a strong foundation for further growth, while continuing its commitment to provide service excellence to customers in its 60th year,' said the Chief Financial Officer and Director of Danamon, Vera Eve Lim.

Vera added that Danamon is strengthening its service accessibility and product variation. 'Our new sales and distribution network have began to take shape, and customers have started to enjoy the benefits of a more integrated service that suit their financial needs,' she said. The improvement in service quality is reflected in Danamon achieving the 1st rank for Service Quality based on survey by Roy Morgan and the 3rd rank for Service in Branch in the Bank Service Excellence Monitor (BSEM) survey conducted by Marketing Research Indonesia (MRI) and Infobank Institute.

Profit growth highlights improved efficiency
Pre-Provision Operating Profit (PPOP) grew by 15% to IDR 4.6 trillion in the first half of 2016 as compared to the first half of the previous year. Cost to Income ratio for the first half of 2016 was 48.5% as compared to 54.7% in the first half of 2015, due to continuous efficiency improvements. Operating costs decreased by 7% to IDR 4.3 trillion in the first half of 2016 as compared to the first half of 2016.

Growth in SME, Commercial and Trade Finance
At the end of the first semester of 2016, loans to the SME segment grew by 1% to IDR 23.5 trillion from IDR 23.2 trillion a year earlier. In terms of year-to-date, loans to SME segment grew by 5% from IDR 22.4 trillion. Loans to the corporate banking segment grew by 1% to IDR 17.9 trillion, while loans to commercial banking segment decreased by 5% to IDR 15.2 trillion. Meanwhile, Sharia loans, which mostly were included in loans to the SME and commercial segments, grew by 6.9% to IDR 3.3 trillion.

Amid a drop in the industry's export-import performance, Danamon's trade finance business performed well, supported by a growth in marketable securities related to trade finance to IDR 2.9 trillion in the first half of 2016. Marketable securities are short term securities issued by corporate and commercial customers for trade financing purposes. All in all, the combined corporate and commercial portfolio, including marketable securities related to trade finance, grew 7% to IDR 36 trillion.

Micro segment loans, through Danamon Simpan Pinjam (DSP), was at IDR 12.5 trillion, a 28% year-on-year decline compared to IDR 17.4 trillion recorded at the end of first half of 2015.

Consequently, Danamon's total loans declined by 8% to IDR 124.9 trillion at the end of the first half of 2016 from IDR 136.3 trillion a year earlier.

Adira Finance's performance
Year on year, national sales for two wheeled vehicles* declined by 7%, while four wheeled vehicles sales grew by just 1% in the first half of 2016. Adira Finance's loans to the automotive sector and white goods financing decreased by 8% at the end of the first half of 2016 compared to a year earlier to IDR 44.6 trillion. On a quarterly basis, Adira Finance recorded a 14% growth in new financing in the second quarter of 2016 to IDR 7.9 trillion.

CASA and time deposits
At the end of the first half of 2016, Danamon's Current and Savings Accounts (CASA) balances decreased by 19% to IDR 44.7 trillion from IDR 55.1 trillion at the end of the first half of the previous year due to the release of high cost CASA accounts. Time deposits decreased by 7% to IDR 61.4 trillion. The quality of CASA funding has improved in line with Danamon's strategy to focus on granular third party funds.

Asset quality remained below regulatory limit
'Danamon's gross non-performing loans recorded at 3.3%, which remained below the regulatory limit,' said Vera. She said that the Bank constantly aims to improve its asset quality through prudent enforcement of risk assessment procedures, disciplined collection and recovery of debts. Over the period of June 2015 to May 2016, the banking industry's non-performing loans increased by 29%, while Danamon's non-performing loans only increased 5% year on year.

Fee income recorded healthy growth
Danamon recorded an 11% growth in fee income compared to the first half of 2015 to IDR 2.1 trillion. The growth in fee income was supported by Adira Insurance, which grew by 2% to IDR 431 billion, cash management, which grew by 10% to IDR 163 billion, and bancassurance, which grew by 15% to IDR 136 billion.
Healthy loan-to-funding ratio and capital
Danamon's loan-to-total funding ratio (LFR) stood at 92.6%. Danamon's LFR remained below Bank Indonesia's threshold, which is set at 94%.

Danamon's consolidated capital adequacy ratio (CAR) stood at 20.6%, while standalone CAR was at 22.0%.

*Sources: Indonesian Motorcycles Industry Association (AISI) and Indonesia Automotive Industry Association (Gaikindo).

Recent Developments
In the first half of 2016, Danamon added a new feature for its mobile banking application, called Ponsel D-Cash, which allows user to conveniently send cash to a recipient, without the need for the recipient to have the application, ATM card, or a bank account.

Throughout the first semester of 2016, Danamon's Transaction Banking signed agreements with Frisian Flag Indonesia, Happy Fresh, and Meratus Line to provide them a wide array of Danamon products and services.

Danamon Syariah also introduced a financial lease with an IMBT or Ijarah Muntahiya Bit Tamlik principle. This financing product has a 'lease-to-own' clause in which the customer lease an asset from the Bank, and, once the lease period end, the Bank will transfer the asset's ownership to the customer. Danamon Syariah also received 'The Most Profitable Sharia Unit' award for Sharia Business Unit with more than IDR 1.5 trillion in assets during the Islamic Finance Award held by KARIM Consulting Indonesia.

Danamon is currently celebrating its 60th anniversary through various activities including the inauguration of Danamon's new head office, attractive promotional offers for customers, social responsibility activities as well as celebratory events for employees and external parties.

About Danamon:
PT Bank Danamon Indonesia, Tbk. ('Danamon') was established in 1956 and as of June 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 June 30, 2016, Danamon provides its customers with more than 60,000 ATMs, including through its association with ATM Bersama and ALTO, in all 34 provinces in Indonesia. Danamon manages around IDR 175 trillion assets as of 30 June 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 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 June 30, 2016, Danamon was 67.37% owned by Asia Financial (Indonesia) Pte. Ltd., 6.69% owned by JPMCB-Franklin Templeton Investment Funds and 25.94% owned by the Public.
For further information, please visit Danamon's corporate website at: www.danamon.co.id.