In 2018, Indonesia’s economy grew by 5.2%, way higher than global economy at 3.0% and even more than in the previous year. It was able to withstand and face uncertainties in both the global and national scale. One of the nation’s banks that succeeded in managing a healthy performance was OCBC NISP. In the past five years, its net interest income went up from Rp 3.74 trillion in 2014 to Rp 6.38 trillion in 2018, accounting for around 80% of its Rp 7.79 trillion total operating income. The bank was able to close 2018 with a net profit of Rp 2.6 trillion, an increase of 21.2% from the previous year. It also reported 10.8% growth in loans to Rp 117.8 trillion— comprising 56% commercial loans, followed by 31.9% corporate loans, and the rest being consumer loans. Its third party funds (TPF) increased by over 10.7% to Rp 125.6 trillion, with its loan to deposit ratio (LDR) strong at 93.51%.
Although loan disbursement at the bank has been growing more slowly this year, OCBC NISP is still relatively confident, and expects growth of 10%, similar to that projected by Bank Indonesia. Meanwhile, its non-performing loan (NPL) ratio last year stood at 1.7%, stable like the past few years. This is also below the industry average of 2.4%, as well as the bank’s peers. The bank’s resilience has also been proven since the severe financial crisis hit Indonesia in 1997, when then-NISP’s NPL remained at 15% while others’ skyrocketed up to 50%.
“This year we want to maintain the NPL as low as possible, below 2%. There is a higher credit risk due to unsupportive macro economic factors—from global commodity prices, the trade war, and a fluctuating currency—which in turn causes lower demand in Indonesia,” says Parwati Surjaudaja, president director of OCBC NISP. The lender consistent performance puts the company among Forbes Indonesia’s Best of The Best list 2019.
While a dynamic and challenging environment is unavoidable, the financial industry nationally needs to be strengthened as well. Moreover, the IMF predicts that Indonesia could be the world’s sixth-largest economy by 2023, made possible as Indonesia enjoys its demographic bonus starting in 2020. Some 70% of the population will be in the productive age, between 15 and 60 years old, and around 50% will be in the middle class segment. Adapting to these customers’ changing behavior and growing digital trends will be essential to meet that premise.
Therefore, last year the bank ran its ‘beyond traditional banking’ initiative, utilizing digital technology to better support the growth of its younger customers—which the bank says is made up generally of those aged above 25 years. OCBC NISP has launched a one-stop mobile banking application ‘ONe Mobile’, which enables customers to conveniently do all kinds of transactions from the usual banking transactions to managing investments such as deposits, bonds, and mutual funds. Since its launch, 84% of the bank’s total transactions have been made using ONe Mobile, leaving the offline bank to serve only 16%, and Parwati expects to see its role grow even larger in the near term. Based on OCBC NISP’s data as per June 2019, the number of ONe Mobile active users grew by 75% yoy, while transactions grew by 97% yoy. The application has also contributed positively through time deposits, growing by 179% yoy, and OCBC NISP is on track to keep expanding the variety of products and investments available on ONe Mobile.
Additionally, although the trend toward electronic applications is one of the factors in reducing its offline branches (from 412 branches in 2011 to 299 this year), this doesn’t necessarily mean that ONe Mobile or its other digital services will replace the function of offline branches. This is because branches still have irreplaceable roles, such as in delivering cash and providing advice to customers. Rather, the branch concept itself has been transformed into a sophisticated ‘Premium Guest House’, with the first one launched in Jakarta in October 2018.
Other financial services particularly targeted at millennials have also been launched this year. The ‘Nyala Bisnis’ program encourages their entrepreneurial endeavors by managing personal and business finances separately, while the bank’s new mortgage program ‘KPR Easy Start’ tries to address millennials’ demand for housing, where installments can be adjusted along with customers’ capacity. The program was launched in April, and in Q2 it contributed 15% of the bank’s total mortgage applications and disbursement.
In mid-July, OCBC NISP announced its own venture capital (VC) entity to the IDX, named PT OCBC NISP Ventura, with registered capital of Rp 400 billion and issued capital of Rp 100 billion. It aims to start operating once it gets its license—which it is hoped will be within the third quarter of the year. “The purpose of our VC is not merely for financial investment. We want to synergize the VC with OCBC NISP, so we can offer more solutions to our customers [regardless of their sectors] beyond financial assistance. For instance, since we focus on helping SMEs, we can help young entrepreneurs in providing accounting software and consulting on taxation; while for medium-scale business we can assist them in human-resources systems, and so on,” says Parwati. Although further details could not be disclosed during the interview, a report in late August said that the VC would provide capital for P2P lending associated with SMEs.
“Looking at the trend, OCBC NISP has always been growing above the industry. We want to keep that going for the long term to gain a larger market share. This will enable us to become a trusted world-standard bank and make a difference for Indonesia,” says Parwati.