PT Bank Danamon Indonesia Tbk (BDMN) Earnings Call Transcript & Summary

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Thank you Tami. [Foreign Language] Good evening. Our trusted media partners hoping everyone stay safe, and thank you for joining us today. Today, I am very delighted to announce Danamon's First half year 2022 financial results. Compared to previous year, Danamon recorded an increase -- a big increase in consolidated net profit after tax and PAT of 70% year-on-year to reach IDR 1.7 trillion. Our total loan book grew by 6% on year-on-year to reach IDR 139.7 trillion. And we have achieved quarterly loan growth across line -- in all line of business are mainly -- particularly supported by a growth in enterprise banking. In 2022, this year, Danamon managed to post a positive profit growth and was able to maintain strong momentum amid global economic uncertainties. Our operational resilience and bank soundness continues to demonstrate a robust progression, providing stable services and support to customers. We continue to invest in digital channels, IT, branding and human resources, people for stronger foundation. As part of MUFG family, the largest bank in Japan and one of the largest leading financial institution in the world, we have free access to MUFG's strength, expertise and network to better serve our customers. Supported by collaboration with MUFG, we achieved a substantial business growth, while our gross NPL improved to 2.8% and loan at risk improved to 15%, thanks to our prudent risk management, rigorous collection and good recovery -- debt recovery as a result. Synergies between Danamon, Adira Finance and MUFG is really key for our business growth, utilizing each entity's respective strengths and capabilities. As a group, we share the same aspiration to provide comprehensive financial solutions across segments and value chains and particularly in the automotive ecosystem and real estate developers ecosystem. We are committed to develop a customer-centric organization to align with our brand promise, which is to provide financial solutions for our customers to help them take control -- proactive control of their financial needs and goals. Respective members of the media, Muljono Tjandra, our Finance Director will now share the details of Danamon's financial results in the first half this year. Thank you. Back to Dani.

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Hello. Good afternoon, ladies and gentlemen. We would like to thank the respective investors and analysts. Thank you for your registration and joining the virtual analyst briefing of PT Bank Danamon Indonesia Tbk, the 6 Months Financial Results and Fiscal Year 2022. I see over here today, we have 16 attendees already joining us today. So before we are opening the analyst briefing for today, let me just explain a little bit on the protocols. So this event is virtually held using MS Teams live event platform. Before we begin, I would like to emphasize on the following information. We encourage participants to join this event by using laptop and user handset to optimize the audio quality. Please ensure that you are joining from a closed room and quite environment with a stable Internet connection. During the event, please kindly put your phone in silent mode to avoid echo sound and do not access the MS Team link simultaneously in more than one device. [Operator Instructions] Now the analyst briefing will start in a moment, and we will put you some buffer as well before we're opening the analyst briefing. Thank you. Okay. Ladies and gentlemen, I would like to welcome you to Danamon 6 Months Financial Results for Fiscal Year 2022. My name is [indiscernible] and today, I will be your host for today's briefing session. Already with us today joining from their respective locations, please allow me to welcome Danamon's Board of Directors and President Director of our subsidiary, Adira Finance. Now before we present the detailed 6 months financial results for fiscal year 2022, I would like to invite Yasushi Itagaki as President Director of Danamon to deliver his remarks highlighting the progress of our key strategies. [indiscernible], the stage is yours.

Thank you, [indiscernible], and [Foreign Language] Good afternoon, good evening, our valued investors and analysts. As introduced, to begin with, let me just touch upon the highlights set us on the progress of critic initiatives here. Looking at the upper side of the page, it's all about MUFG collaboration. The synergy with MUFG collaborations are continue to grow in a very substantial pace. We accumulated a number of these just over 350 and the synergy loan reaching at IDR 16.2 trillion and CASA at IDR 4 trillion. The synergy deals are diversified across line of business from consumer banking to enterprise banking now into institutional -- financial institution banking. For example, the Japanese real estate developers are actively selling high-end apartment and land and houses in Indonesia. Through the partnership with them, them means Japanese real estate players, we keep increasing our presence in mortgage in that segment. In treasury business, we significantly grow Indonesian government bond sales, as you see on the top-right hand, IDR 1.8 trillion by capturing large money flow -- investment flow from Japanese institutional investors into the Indonesia, leveraging our MUFG access or network. As an Indonesian economy recovers, Japanese and multinational corporates or institutional investors increased business activities here. We are aiming to accept you with the realization of more specific signature deals in the holding events and occasion. But as you see, we have a very substantial high pace growth in MUFG collaboration. And the bottom of the stack is about digital, digital front activities. We stay committed with the digital development, which we focus on customer journey and delivering improved customer experiences. Our digital capabilities and partnerships continue to expand. The penetration of the digital channel acquisition and transaction continue to increase steadily as you see. Learning at the growth of our TV online and bond transactions, now our D-Bank PRO is equipped with FX transaction capabilities, which recaptures our customers' interest. We also continue the synergy with Adira Finance via API onboarding and direct debit and launched the WhatsApp banking with chat call center features. In the second half this year, we keep expanding our partnership with digital players. To name just a few, serving our customers' transactions needs, we now have a partnership with in the payment solutions with [indiscernible] . Next page, please. This is about collaboration -- our enhanced collaboration with Adira Finance and MUFG, targeted on automotive ecosystems, which really focused right now. As one group, leveraging our strengths and synergies, we continue delivering competitive and innovative proposition and services in this segment. Our presence and collaboration with prime auto exhibitions, such as EMS and Jakarta Fair have received very positive enthusiasms and expectations with encouraging business leads and following transactions in the automotive ecosystem. It is our commitment to support the recovery and long-term growth in this automotive ecosystem. And looking forward, we really continue to strive in aiming the most trusted financial partner of the automotive ecosystem. Thank you for listening my highlights. This concludes this initial update on our strategic initiative, and I pass it back to Yogi for the following agenda.

Thank you very much. [Operator Instructions] Specifically, after this first agenda from BaaS, please feel free to start typing up your questions. And then at the end during the Q&A session, we'll start bringing up the questions to our BOD members. [Operator Instructions] Now moving on to the next agenda, it's time to listen to the presentation on 6 months financial results of fiscal year 2022. I would like to invite Muljono Tjandra as our Finance Director, to deliver his presentation. [indiscernible] channel is yours.

Thank you, Yogi, and good afternoon all the investors and analysts. So let me go through the first half of 2022 financial highlights. So I'll start with the loans. So we see that our quarterly loan growth in all line of business. Total loans increased by 6% year-on-year. EB portfolio grew by 18% year-on-year and reached IDR 67 trillion, supported by collaboration with MUFG and focus on blue chip companies and SOE. Adira first half new financing increased by 21% compared to the same period last year. On the funding side, we see that institutional approach and collaborations with MUFG resulted in a 17% year-on-year CASA growth. And CASA ratio reached 64.4% in the first half from 56.3% last year. On the asset quality, NPL percentage consol improved by 20 basis points year-on-year to 2.8%. And NPL coverage improved by 20 basis points year-on-year to 203%. LAR percentage, this is include corporate structure still under forbearance, improved almost by 100 basis points year-on-year to 15%. On the profitability, we see that our NIM improved by 40 basis points, driven by improvement in funding compensation as well as cost of funds. Our risk-adjusted NIM improved by 20 basis points year-on-year and NPAT increased by 70% year-on-year and reached IDR 1.7 trillion in the first half 2022. Next, so this is the detail of our balance sheet, if you like. So the total assets remains same like last year with a change in compensation from government bonds to loans. Total loan portfolio and trade finance increased by 6% and Q-on-Q grew by 5%. Total funding also remained as same as last year, but there is a shift in composition from time deposits to CASA. And this resulted from -- our CASA grew by 17% year-on-year and 6% Q-on-Q, and our CASA ratio increased to 64.4%. Next, detail of our income statement. Our operating income grew slightly compared to the same period last year, supported by grew in net interest income. OpEx grew by 8% year-on-year. This is mainly due to the investment commitment to build our IT and digital capabilities, marketing and branding. Our operating profit grew by 57% year-on-year and our NPAT increased by 70% year-on-year to reach IDR 1.7 trillion and all supported by the lower in our cost of credit. Next, on the financial ratio. NIM year-on-year improved by 40 basis points, supported by improvement in our cost of funds. And compared to the same period last year, our CoC and risk-adjusted margin better by 160 basis points and 200 basis portions effectively. NPL consol growth at 2.8% or improved by 20 basis points compared to the same period last year. Loan loss calculate, as I mentioned earlier, 203% or improved by 20 basis points. Our loan at risk include COVID at 37.3% or slightly increased compared to the same period last year. Our CAR remained strong at 26%. Next, we see that on the -- this is the detail of our funding. You see that strong focus on granular funding. This can be seen from the composition of our saving accounts and current accounts as presented in the bottom right table. Our CASA grew by 17% and CASA ratio improved to 64.4%. Next, capital remains strong at bank-only 25.5% and consol at 26% and almost 100% in the form of Tier 1 capital. Next, on the -- we see that the loan composition as well as the loan growth Q-on-Q as well as first half compared to the same period last year. So we see that enterprise banking grow very strongly 18% and Q-on-Q grew by 10%. So Adira Finance, despite the issue on the stocks, they are able to have a positive growth Q-on-Q. Next, so very diversified sector in loan compositions and largely dominated by the working capital, if you like. Next. So this is the picture of the Adira Finance new financings. So remain steadily. So table on the right is showing our new loan disbursement quarter-by-quarter. So compared to the last year, the disbursement grew by 21%. So this is despite the issue on the inventory. They are still able to show the strong growth. Next, this is our fee income, net interest income, if you like. So year-on-year dropped by 6%. This is mainly due to the credit-related and treasury activities due to the market conditions. Other than those, we see that the banca wealth management and cash related showing a positive growth compared to last year. Next, our asset quality, as I mentioned earlier, that our NPL ratio at 2.8%, so improved by 20 basis points compared to the same period last year. Our special mention improved by 20 and 30 basis points to 8.3%. In the amount, it's improved by IDR 2.4 trillion year-on-year. NPL coverage increased from 183% to 203%. Next our cost of credit improved from 3.9% to 2.3%. And our LAR improved to IDR 19.7 trillion from IDR 24.9 trillion last year. And LAR as a percentage of total loans improved by -- from 19.9% last year to 15%. And for the profit restructure under forbearance was also decreased from IDR 7.6 trillion last year to IDR 5.2 trillion. So with this, I conclude my sharing on the financial parts and welcome for any questions from the analysts as well as our investor.

Thank you very much, [indiscernible] . So ladies and gentlemen, as [indiscernible] mentioned, now is the time for our Q&A session. So for those of you who haven't written your questions, I know -- I think we have the full presentations from our BOD members, our CEO and our CFO. You also already had received the handout of our presentations. [Operator Instructions] Now while waiting -- I know everyone is a little bit busy typing on the questions. While waiting, we are presenting our 66th anniversary manifesto [Foreign Language] okay? But we don't distract it with the videos, keep watching on the video, but also please treat your questions on your -- on our Q&A box. Thank you.