Citibank Indonesia chief executive Batara Sianturi. (Photo courtesy of Citibank Indonesia)

Citibank Indonesia Booked 46% Profit Increase in 2016


MARCH 29, 2017

Jakarta. Citibank Indonesia, a local unit of global banking giant Citi, saw a 46.2 percent increase in net income last year due to strong growth in interest and operational income streams.

Citibank Indonesia's net income surged to Rp 2.29 trillion ($172 million) compared to Rp 1.56 trillion in 2015.

Net interest income, or income generated from interest charges minus the cost of paying depositors, rose 16.1 percent to Rp 4.12 trillion in 2016. The bank's fee-based income rose slightly by 2.3 percent to Rp 2.01 trillion last year from Rp 1.96 trillion.

"The positive performance last year was also boosted by the growth savings and deposits, which contributed 68.8 percent to the company's total third party funds," Citibank Indonesia's president director Batara Sianturi said on Wednesday (29/03).

The bank's net interest margin – a measure of net interest income versus the amount of interest paid out to lenders – also rose to 6.3 percent from 5.35 in 2015.

Citibank's total outstanding loans stood at Rp 38.91 trillion last year, relatively flat compared to Rp 38.75 trillion in 2015.

"We expect loan demands will surge in the second half of this year as global commodity prices improve and an expected rating upgrade from Standard & Poor's for Indonesia will boost consumers' confidence to finance their business with Citi loans," Batara said.

Batara said Citibank Indonesia expects outstanding loans to grow 11 percent this year as the bank will aim to ramp up lending to corporations in the telecommunications, healthcare and mining sectors.

The bank's operating expense versus operating income ratio improved to 81.6 percent last year from 89.2 percent in 2015.

Citibank's capital to adequacy ratio – a ratio of a bank's capital to its risks  increased to 30 percent last year from 28.2 percent a year earlier. The bank's gross non-performing loan (NPL) stood at 2.83 percent, an increase from 2.3 percent in 2015.

"The bulk of our NPL last year came from our commercial banking division, however, it is still in line with our NPL target of below 3 percent," Batara said.

He said Citibank Indonesia will focus on digitizing its business to boost the bank's cost efficiency.

"Around 80 percent of our consumers have used transactions via digital channels, while the remainder still performs transactions through branch offices," said Batara.

He said that Citibank's effort to boost efficiency saw the bank shrink the number of its local branches last year. Citi Indonesia currently operates 10 branches across the archipelago, compared to 20 in 2015.

"Through digitization, we were able to minimize our offline offices but still managed to book an increase in profit," Batara added.

To boost performance through digitization, Citi launched two products last year: Citi Virtual Cards Account, an online credit card for corporate clients, and Citi MobilePASS, an application service for corporate users.