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

Good afternoon, ladies and gentlemen. Thank you for joining PT Bank Danamon Indonesia Tbk's Investor and Analyst Briefing Full Year 2023 Financial Results. Before we begin, I would like to emphasize on the following information. We encourage participants to join this event by using laptop and use headset to optimize the audio quality. Please ensure that you are joining from a closed room and quiet environment with a stable Internet connection. During the event, please kindly mute your microphone and close your camera. Please also put your mobile phone in silent mode to avoid echo sound and do not access the MS Teams link simultaneously in more than one device. [Operator Instructions] Please also note that this event is live stream and accessible via Stockbit's YouTube channel and applications. The investor and analyst briefing event will start in a moment. [Presentation]

Ladies and gentlemen, I would like to welcome our respective investors and analysts. Thank you for joining PT Bank Danamon Indonesia Tbk's Investor and Analyst Briefing Full Year 2023 Financial Results. Today, I will be your host and please allow me to quickly introduce myself. My name is Yogi Zadian Arief. I am the Corporate Strategy, Planning and Investor Relations Head of Danamon. I would like to welcome Danamon's Board of Directors and Board of Management and also President Director of our subsidiary, Adira Finance, who have joined from their respective locations. Ladies and gentlemen, before we begin the presentations, let us share a quick video summarizing our journey in 2023. [Presentation]

Okay. Now I see familiar faces from our analysts is already joining us for today. Before we hear the detail of PT Bank Danamon Indonesia Tbk's financial results for full year 2023, I would like to invite Baba Daisuke Ejima as our President Director, to deliver his remarks highlighting the progress of our key strategies. Pak Ejima, the screen is yours.

Thank you, Yogi. Next page, please. First of all, thank you all investors and analysts for joining this session today. We truly appreciate you spending time for Bank Danamon. Detailed financial numbers will be covered by CFO after me. So I would like to [ inform you ] of our key development and journey of Bank Danamon in 2023. First is our continuous development in digital banking. On left-hand side, the development journey on our mobile banking application of D-Bank PRO for individual are robust since its launch in 2021. Through our agile [indiscernible] method, D-Bank PRO launched 22 new features in 2023 only to meet our customers' various financial needs such as large currency account and FX live rate, bills management, product of mutual fund and bonds, access to consumer loans like credit card and Adira auto loans [ better way ] and bancassurance, et cetera. Hence, compared to previous year, we were able to increase its number of users over 100% and transaction volume and value around plus 30%. Similarly, on the right-hand side, we are continuously building our digital solution to support our business customers. Since the full migration to our new platform of Danamon Cash Connect, DCC, we have been focusing on development of cash management and financial supply chain capabilities. Lastly, our digital development continuously built with connectivity by collaborating with leading digital players in the market. This is to create the value chain ecosystem. And as reflected at the bottom of this page, the transaction growth has been promising and benefiting both our individual and business customers. Next page, please. This page is on how we have been redefining our customers' experience through our next-generation branch concept. This new concept is not merely about the look of interior and exterior, but it is to deliver a holistic upscale customer experience, including community with seamless interactions and use of savvy digital technology and [ central ] financial advisory services. We kicked off this initiative with 2 branches upgraded in late 2022 and widespread to additional 51 branches across 18 cities in 2023. As shown on the top box figures, we saw encouraging results from the initial implementation of 5 branches. These 5 branches have been in operation on the new concept over 9 to 12 months. Fresh funding increased by 23% and new loan disbursement by plus 11%, which includes loan for SME banking and new customer acquisition has also showed a good progress, both in Privilege and Optimal segment. We are glad that our investment in channels, both in digital and branch network are being positively accepted by our client. Next page, please. Since being part of MUFG family in 2019, we have been consistently building collaboration with MUFG. And since last year, given the fruitful result of past track record, we replicated similar approach in strengthening our synergy with Adira Finance. Since 2020, our synergy deals and loans have grown over 200%. In last year alone, Adira Finance sold 10% of its sales deferred from Danamon customers. Such progresses are supported with various collaboration events such as Indonesia International Motor Show, IIMS, which is currently taking place. Our targeted ecosystem approach has been critical for us in expanding our customer reach and real estate ecosystem is another good example. We focus this real estate ecosystem through Japanese developers in the country. And in 2023, last year, we paid tangible milestone deals through prominent Japanese developers. All in all, we have partnered with 32 projects, which is about 75% of total Japanese developers project in Indonesia. With this good traction, we aim to realize a business impact from this ecosystem in years to come. Back on the automotive ecosystem with Adira Finance, as shown on the right-hand side. The progress has been mutual. New mass customers from Adira referral is bringing long-term opportunities for Danamon. Next page, please. Looking ahead, as we embark the next 3-year plan, we will leverage our group capabilities more, not merely a strong banking business. between Danamon and MUFG but with multifinance area, which in addition to Adira Finance. Now we have Home Credit Indonesia, which these hand phone and durable goods financing supported by strong digital capabilities and offline sales expertise. So I would like to call everybody to put yourself on mute, please. Thank you. And subject to regulatory approval, we will have Mandala Finance as our group member, which will supplement Adira Finance's presence in Indonesia. As shown in the mid- and light part of the slide, our local and digital presence is being complemented by MUFG and partner bank coverage globally and in Southeast Asia region, particularly. We will strive to leverage these unique capabilities to grow together with our customers, so that Danamon and group members can differentiate us from other peers in the market. Next page, please. While we will remain focused in building strong foundation for Bank Danamon, in the next 3 years, our priority shift is to grow as a financial group. We have set next 3-year priorities, which comply of strategic themes, including: one, building dominance in targeted ecosystems such as automobile, real estate education, et cetera; two, delivering unique MUFG proposition to our customers; and three, advancing in data analytics and process improvement. In parallel, we continue to focus on foundation building in banking business, which are IT and digital, people, planning and branch and ATM network. We believe our strategic directions will optimize our resources and able to preserve our double-digit growth in lending and funding with sustainable profitability for the next 3 years. We commit to our vision in enabling millions to prosper and making tangible contribution to Indonesian economy. Thank you. And now I give the floor to Pak Muljono, Danamon Finance Director, who will share the details of Danamon 2023 financial results. Pak Muljono, please?

Thank you, Pak Ejima, and good afternoon, everyone. Let me share with you the full year results of the 2023. I'll start with the few key highlights. So on the loan, you see that our -- that we delivered strong growth in all engines. So our loan and trade finance rates IDR 174.9 trillion grew by 19% year-on-year, and our consumer loan grew by 41% year-on-year, supported by Japanese ecosystem and completion of Standard Chartered portfolio acquisitions. Adira Finance new financing grew by 31% year-on-year. On the liquidity and fundings, total third-party deposit reached IDR 140.3 trillion, grew by 10% year-on-year, while funding growth shifted to TD due to high interest rate environment, our granular funding continue growing and grew by 10% year-on-year. On the asset quality, our LAR percentage, loan-at-risk percentage, include COVID restructure still under forbearance, improved by 100 basis points year-on-year to 11.6%. NPL coverage ratio reached 266% from last year of 261%. And our NPL ratio gross improved by 40 basis points to 2.2%. On the profitability, our NIM improved by 20 basis points year-on-year to 8.2% despite the higher interest rate environment. Operating income grew by 7% year-on-year to IDR 18.1 trillion, and our NPAT reached IDR 3.5 trillion, increased by 6% year-on-year. Next, this is the picture of our assets, our balance sheet. Basically, our total asset control increased by 12% year-on-year, mainly due to loan growth and the growth was quite stable Q-on-Q. The funding grew by 13% year-on-year. So this funding, including the borrowing which mainly coming from Adira. And as we discussed earlier, our funding growth shifted to TD due to hybrid interest rate environment. Next, on the profit and loss, our operating income grew by 7% year-on-year, supported by growth in both interest income and noninterest income. OpEx increased by 8% year-on-year due to the investment commitment in various key areas such as IT, infra, digital capabilities, marketing and branding. CoC in amount increased by 5% year-on-year. However, in percentage, which I will share later, has remained the same at 2.4% despite a significant increase in loan growth. With that, our NPAT increased by 6% year-on-year and reached IDR 3.5 trillion. Next, this is the financial ratio. You see that our NIM year-on-year improved by 20 basis points, mainly supported by better loan yield and cost of fund management. And compared to last year, our CoC relatively flat at 2.4%. With that, our NIM improved by 20 basis points and our risk-adjusted margin better by 20 basis points. NPL consol gross at 2.2%, improved by 40 basis points compared to last year, and our coverage ratio at 20% and 66% improved significantly compared to last year. Loan at risk, including COVID at 50%, and our CAR consolidated remained strong at 27.5%. Next, on the funding and liquidity. So we continue focusing on granular fundings. This can be seen from the funding structure on the bottom right table, where we were able to grow our granular funding by 10% compared to last year. CASA ratio at 52.3%, lower compared to last year due to high interest rate environment and funding growth shifted to TD. We have a healthy liquidity supported by strong LCR and NSFR. Next, this is the structure of our capital. So the consol CAR at 27.5% and standalone at 25.3%, far above the minimum requirement, with almost 100% represent Tier 1 capital. Next. This is the -- represent the detailed loan compositions. So if you refer to the live chart remains stable. The loan composition remained stable and detailed loan growth by business engine refers to the right tables. As we discussed earlier, the consumer growth supported by Japanese ecosystem and completion of Standard Chartered portfolio acquisitions. Next page. This best represent the detailed loan growth, retail loan by sector which is well diversified across economic sector and mainly in the form of the working capital. So loan by sector is on the left table and the right chart represent the loan by purpose, which mainly represent the working capital loans. Next. So this is the Adira Finance. Chart on the left showing Adira was able to grow above industry both in 2-wheelers and 4-wheelers, and table on the right, off right is solving the new financing year-by-year. So compared to last year, the new financing grew by 31% supported by all products. With that, Adira loan outstanding grew by 25%. Next, this is showing the stable NIM trend and the 6% year-on-year on the noninterest income on the right chart. Next, NPL. As we discussed earlier, the NPL ratio at 2.2%, so improved by 40 basis points compared to last year. Special mention increased by 30 basis points to 8%. All-in amount increased about IDR 2.5 trillion -- IDR 2.4 trillion year-on-year, mainly coming from Adira. This is due to nature of the business here. Despite the strong loan growth, our NPL amount remained stable compared to last year at around IDR 3.5 trillion and NPL coverage ratio increased from 231% to 266%. Next, this is the last slide on the financial updates. Cost of credit [ will remain ] flat at 2.4% and LAR amount increased by IDR 1.5 trillion from IDR 17.2 trillion last year to IDR 18.7 trillion. However, LAR as a percentage of total loans improved by 100 basis points from 12.6% last year to 11.6%. Further, our COVID restructured under forbearance, improved from IDR 2.9 trillion last year to IDR 1.7 trillion at the end of the 2023. So with that, I finish my financial updates and pass it to the Yogi.

Yes, for sure, thank you very much, Pak Ejima and Pak Mul, for the presentations. So ladies and gentlemen, now is the time for us to begin the Q&A session. [Operator Instructions] I'm sure some of you now already hear our presentations are preparing the questions. While waiting for the incoming of the questions, let's have a look at our aspiration video. Grow with us and our current event, IIMS 2024. [Presentation]

Okay. Thank you. So on the last video, our IIMS 2024 has just opened last Thursday. I'm sure some of our investors and analysts already experienced the event directly. Thank you very much for your support, and we will be very glad to welcome you at the event until at the end of this week. Now I see some questions already coming in. So let me just read the first 2, which is about Adira. So I'm sure Pak Made are more than happy to cover this one. So let me read it. So this is from Irvan. Thank you, Irvan, from Pangolin Investment for the questions as well as from Owen from CGS-CIMB Securities. First one is what caused the gross NPL for Adira to increase? And what's the expectation for full year '24? I believe this is referring to the target or guidance for the loan growth. Pak Made, if you don't mind to cover these 2 questions.

Yes. Thank you, Yogi. So what happened is in starting 2023, there will be normalization on underwriting. So having said that, our level of NPL is still below pre-COVID level. So I think it's after COVID, there is a lot of restructuring. We deal with that and then tightening the underwriting. And after that, following the recovery of the auto, we are normalized the underwriting standards. So we are having some increased normalized level of NPL. With regard to the growth target, we expect this year we will grow around 12% to 14% in terms of new financing.

Okay. Thank you, Pak Made. So while you're on screen, there is a follow-up questions from Vinchel. Also, thank you, Vinchel from Pangolin Investment. Follow-up question is about what is the plan with Home Credit and Mandala and Adira? Any plan for cross-selling? And what's the growth target in the nonautomotive segment in the mid to long term, Pak Made?

Yes. Thank you for the question. I think the first one is, as part of the growth, one of the strength of the growth that we want to do going forward is basically collaboration among the member of the MUFG growth, including Home Credit and Mandala. So yes, we will collaborate to basically cross-sell, referral, a lot of business synergy that we want to extract from collaboration within the group. The second question, Yogi? What is -- can you say the second question?

Sure. The second question is what is the plan for cross-selling? And what's the growth target in nonautomotive segment in the mid to long term, Pak?

Yes. I think nonauto right now is replacing around 20% of the total portfolio of Adira Finance, primarily in the form of multi-purpose loan. We want to continually increase the share of the multi-purpose loan to around 25% to 30%.

Okay. Thank you, Pak Made. And I believe this growth is also supported with collaboration, potential collaboration going forward with Home Credit and Mandala, I believe, yes.

Yes, sure.

Okay. Moving on, there is also questions. Thank you, Darren, from BNI Securities. Several questions here. Let me just read through one by one. And I believe for this question, Pak Mul will be covering to respond. So the first one is what is the stable CoC level long term, short term for Danamon? As well as what is the level of LAR and NPL coverage are we looking at the long run?

Sorry, Yogi, I think I should probably be answering that.

Yes. This is for Pak Dadi, yes. So Pak Dadi, I think there are several questions here, including also the write-off for fourth quarter in '23 as well as the last one later on with Pak Mul on the cost of fund outlook for first half '24 and second half of '24. So Pak Dadi, I think you can cover for the first 3 questions, if you don't mind.

Sure. Yes, okay. Yes, so I think on the first question regarding CoC, if you look at the last 15 years, right, on -- during normal years, and what I mean with normal years are most of the years during the last 15 years, except for like, let's say, 2020, 2021, which were affected significantly by the pandemic, right? But Danamon's normal CoC would range anywhere between 2.5% to 3%, actually 2.6% to 3%. So last year, we were at 2.4%, which was definitely below the normal range, right? And our -- I think what we can see, I think in the shorter term, right, our CoC would be closer to the lower end of the range. So it would be closer to 2.5% rather than the 3% level. Then the next question is on the NPL, right? I think I -- there's a question on NPL.

Yes. It's about LAR and NPL coverage looking at the long term, yes.

LAR, okay, okay. Yes. SO on NPL, I think probably the -- a lot of focus tends to be given on NPL. So what I can say is that, again, NPL-wise, Danamon has normally ranged anywhere between 2.7% to 3% in normal years. And I would say, in the shorter term, we are actually now returning, right, to our normal trend post pandemic, along with our expansion of risk appetite, et cetera. So -- and what you've seen with the increase of ENR, et cetera. So we are moving back to the normal years, but I strongly believe that we will be closer to the, again, the lower end of the range. So our NPL would be anywhere between 2.6% to 2.8%, I would say, in the shorter term. In terms of LAR, we have, in a way, reached the bottom range of the -- of our LAR, right, which is at 12%. And again, I believe we will be a full green at 12% to 13% in the near term. The next question is under -- oh, write-off on the -- in the fourth quarter, I don't think I have the data at the moment, but I can return again, right, Yogi? Give me a few minutes, and I'll return again for the numbers of write-off in the fourth quarter.

Sure. Thank you, Pak Dadi.

Thank you.

So while waiting for that, Pak Mul, can you cover on the next question regarding the cost of fund?

Yes. On the cost of fund, basically, if you're talking cost of fund, we are talking about Bank Danamon here because Adira has their own borrowings and also bonds. On Bank Danamon, we see that the cost of fund will be around 3.5% for full year. So this is also on the assumption based on a few assumptions. First, I think, is in line with the projection on flat rates as well as the high rate. So I think we assume that from the various analysts that the high rate will be lower in the second half, starting from the second half. This is also an assumption that we are able to control the inflations and also the business environment.

Thank you, Pak Mul. So let me cover the next questions on the chat box before I move on, there's one raised hand. Just very quickly, thank you, Rahmanto from Stockbit. First question is around cost of credit. I think it's already covered earlier from Pak Dadi. The next question is with the strategic direction of 2024, 2026 of double-digit growth, any guidance on the loan growth and LDR target for 2024? And what segments will be the drivers? I believe Pak Mul and Pak Ejima can cover this one. You are still on mute, Pak Mul.

I think I can cover the loan growth.

Sure.

I think the loan growth, we are talking about the -- of course, we will follow the guidance from the [indiscernible] and central banks. So basically, we are looking at the higher single digits or lower double digits. We're talking about 9% to probably 10% loan growth. It depend -- also depend to the -- that the business environment in the country, of course. On the second question basically on the LDR, we are trying to maximize the fundings and make sure that those are really support our business. In terms of the LDR, we are talking about ranging between around 95%, I guess, we are at 95% to 97%, yes.

Okay. Thank you, Pak Mul.

Okay. Yogi, I have the data on write-offs. If you...

Yes, Sure, Pak Dadi, please.

So write-offs in the fourth quarter of 2023 was at IDR 8.7 trillion.

Okay. Thank you, Pak Dadi.

Thank you.

I believe that answers the questions. Just to supplement very shortly...

Yogi, sorry.

Yes, Pak Ejima, you want to supplement on the strategy part? Yes?

With regard to the contribution of Bank Danamon to Indonesian economy, we still want to keep this double-digit growth in loan and a slightly larger percentage increase in double digit in funding side. Last year, as I explained, we had 19% plus, which is exceptionally good. And this came from all 4 core segment, not necessarily the large corporate but SME, consumer funding and Adira, all 4 engines group. Whether we can continue this level of growth, it's probably not sustainable, as we all know. That's why the number will get lower in this year. But still, we would like to shoot for low double digit, close to 10% level in this year. Thank you.

Thank you, Pak Ejima. So let me move on to the people that is raising hands. Rajesh from Doric Capital. [Operator Instructions]

I'm unable to open the camera right now from outside the office, but happy to. Congratulations, first of all, on very strong operating performance. We have been investors in Danamon for since 2006 for a long time, and then we became investors again about 15 months ago. So we believe in the long-term strategy and growth of Danamon, but there are a few questions that I would like to clarify. One, regarding the answer to an earlier question on the stable NPL level, I have -- I wanted to clarify. If you look at the history of Danamon, there was a lot of high-risk segments that were a big portion of our asset book. We had microfinance loans and we had a lot of SME and medium corporate exposure. But ever since MUFG takeover, our loan mix has changed. It's become much more lower risk. We have a lot more exposure to mortgage, we have exposure to larger corporates. And even within consumer outside of mortgage, it's a lower risk mix. Adira, let's assume that Adira's mix is similar. Even -- I believe Adira, some loans are riskier, some loans are less risky but average is roughly the same. But Danamon, definitely the loan mix is lower in terms of risk. That being the case, why would our NPL in the medium term not be much lower than history rather than being towards the low end of history? If you could please explain that? And secondly, the question was regarding what is the target level for NPL and LAR coverage? Again, if earlier, a lot of our mix would say towards microfinance. Then if a loan is at risk, then there's a -- recovery of that loan is going to be very low. So it makes a lot of sense to have high LAR coverage. But if we have a mortgage loan, then the recovery is going to be much higher. Even if it's NPL, you're going to recover maybe 60%. So therefore, the loan-at-risk coverage need not be as high as history. So if you could comment on both these issues.

Sure, Rajesh.

Sure. Thank you, Rajesh. Yes, Pak Dadi, if you don't mind, I think a couple of questions on the asset quality.

Yes, certainly. Yes, sure. Yes, actually, if we look at the -- again, the NPL ratio historically in the last 15 years, it was actually most -- in most years, normal years here, I'm talking about, it was very much close to 3% actually. I was actually saying 2.7% to 2.9%. But I strongly believe that in most years, it was closer to 3%. And sometimes, it goes a bit beyond 3%, right? So what we are aiming and what we are projecting basically in the near term, yes, I do acknowledge that there is some shifting mix rate within Danamon itself, and that is actually the reason why we believe that we should be able to reach NPL ratio of anywhere between 2.6% to 2.8%. That will be our new normal, I would say, in the -- as long as our portfolio mix remains the way it is at the moment. We need to remember also that despite the -- I think -- or probably the only difference, right, that we probably see in the portfolio mix going forward is the absence of the microfinancing. Microfinancing was what we -- what Danamon had in the past, right? You mentioned, Rajesh, but the higher-risk segment that we had. So microfinancing was basically the only difference. But then the other segments going forward, it should basically very much the same with whatever we have. So we will be growing our SME again and commercial banking. Mortgage, yes, we are growing mortgage. But actually, if we look at the -- for example, a lot of the analytical data on mortgage, actually at the level of segments in mortgage that we are exposed to, the NPL ratio generally among banks are actually run above 2.5%. Although you're right that on the CoC itself, the CoC is generally lower. And recovery, you're correct, the recovery can be higher. But you have to keep in mind that the turnover, the recovery time is actually much longer in mortgage than in segments like Adira, for example. So in terms of -- and this relates to what I will try to explain on the NPL coverage, which we strongly believe that we will prefer to be -- to have an NPL coverage of above 200%. This is also part of our strategy, to be more prudent rather than -- since you've been covering us for more than 15 years, right, for 18 years by now. Yes, you -- so you're referring to our usual NPL coverage in the past of about 120% only. But we strongly believe at the moment actually with the bigger exposures in the commercial banking sector, in commercial banking segment, we believe that we should have coverage above 200% actually. That will be a more prudent approach. So that's my take on your question.

Thanks for your detailed and patient explanation. I'm all for conservative banking and for conservative guidance. I think that's perfect. That's what bankers are expected to be. It's much better to be conservative than regret later. But I just wanted to make one observation that it is not just about being conservative because there is a real cost to how we think about these segments. Because if we assume, for instance, that our NPL in mortgage is going to be 2.5%, let's assume that's what we really believe, then it becomes very difficult to grow that segment because you will be then either targeting very high-risk mortgages because that's where you can get the yield. Or if you believe in better quality mortgages, if you still assume it's 2.5% NPL, you won't be doing that business. So if we want to grow our book, and we have to also have realistic estimates of the NPLs and risk and target the business accordingly. Otherwise, we will not be able to grow. And this is -- our -- we end up growing in the wrong segment. I know you cannot answer this question right now, but I would strongly suggest we look at this on a segment-by-segment basis. And even within the segment, look at it in a much more granular manner, because if you look at the mortgage NPL for BCA is very different from, say, from the government bank which does mortgages because they are targeting very different segments. The government bank has 5% NPL in mortgage. BCA has 1% or less. So average is 2.5%. That doesn't mean mortgage is 2.5%. So I know you know this, but I just want to be cleared as an investor and shareholder in the business that we are not giving up profitable good growth because we are too conservative about the NPL assumption because that can hurt us. And that brings me to the second issue that I want to talk about. I truly believe you've done a lot of good things over the last 3 years in terms of improving your funding, improving the -- on the asset side, on the system side. But end of the day, we are still setting our targets too low because you're setting your target for say, low double-digit growth in loans for next year. And I guess, -- but if you look at the nominal GDP growth in Indonesia, that's likely to be low double digit or somewhere there. We don't know exactly where it will be, but say, roughly in that range. So essentially, to grow at nominal GDP is the minimum that we should do. But if we are gaining market share in terms of doing good things for our customers and preserving the Indonesian economy, and we are doing better than our competition in serving the Indonesian economy, we should be targeting to grow at least at 1.5x nominal GDP. And therefore, if we're growing 19% like we did this year from a relatively low base, that's not abnormal for us to do that or sustain it for a period of time. Ultimately, it's about saying, are we getting enough good quality customers to grow rather than any particular number, 12% or 19%? It's -- that would be my hope that Danamon can actually grow more than 15% on a consistent basis, assuming a nominal GDP growth of 10% in Indonesia. And also on the ROE, currently our ROE is, whatever, 7%, 8%. That's just too low. Ultimately, an ROA of less than 2% and ROE of 8% is unacceptable to an investor. And we hope that those numbers, ROA move up over 3%, the ROE move up over 15%, are targets that you have. Could you please explain in your strategic vision, how does this fit in with our thinking?

Noted. Thank you, Pak Rajesh, for the big expectations. Yes, I think the points that we've taken is past few years, we focused more on the size than profit or profitability, as we have said. There are also an approach that we are also aware of that other banks are taking more on a portfolio basis to strengthen some customer segment and but weakening the other segment, et cetera. We are also having the same concept next 3 years. I didn't explain, elaborate more in my presentation, but that's what we'd like to target in ecosystems. At our size, we are not able to cover everything. So rather, we want to battle in the field that we have higher possibilities to win. Those are what we call ecosystems. Automobile, we have been working very hard along with Adira, and these are more as getting prominent position in this ecosystem. We are also targeted -- targeting real estate. And as I mentioned, we want to expand it to education or [indiscernible] and [indiscernible], et cetera. So those areas we want to grow. Whether we can continue the high double-digit percentage we are indicating, we want to. But for us, more -- keeping the more sustainable profitability is equally or getting more imminent and important at this juncture. So we also directly considered in balance in terms of portfolio where to grow, and we have to get more profitabilities, et cetera. At the end, we are a private company, listed companies. and we would like to meet the investors, analysts, the profitability expectation. That's for sure our first priority. At the same time, considering the presence in Indonesia of Danamon in the market, we also want to support the community. We also want to support the growth of these countries. So where we can balance these 2 slightly different angles. But constantly, we have been discussing and your point, well taken. Thank you so much.

Thank you, Pak Ejima. So Rajesh, I'm sure, I think we have met last year. I believe you will have a plan to visit Jakarta this year. We'll have next meeting, I believe, and we'll go to have that. If you don't mind, cautious of time, there is an additional question from Mandiri Securities team. I believe Kresna, you were raising your hand earlier. Do you want to open your camera or shall I just read your questions?

I think we will be happy if you can address the questions on the chat line. I really appreciate the opportunity if you can discuss the questions there.

Sure, Kresna. So let me read from your team first from Boby. So the first question is, could you share about Japanese company stance on Indonesia? Any increase in commitment, investment demand or loans in particular sector? How do they think of us during the election year right now and next 3 to 5 years? Pak Ejima or Pak Nao, do you want to cover this one?

Okay. Let me answer and maybe Ejima-san be able to add his color later on. Okay. The Japanese -- the company stance on Indonesia I think remain optimistic or confident, especially on the long-term basis. So what we do see the stable demand for loan is in the 3 industries: real estate, food and beverage and health care. Those 3 segments, we see some stable loan demand from the Japanese, the company. On top of that, they are looking for local partners to support their -- the business expansion in Indonesia. We are working on the lending to them as well as the finding the local partner in Indonesia to support their business expansion here in Indonesia. So the last part of the question, the -- I think the momentum will remain unchanged. Even -- we really hope the Japanese companies, the commitment or investment or demand or loan in Indonesia will continue for the next 3 to 5 years. That's all maybe. Ejima-san, you may want to add your color?

Thank you, Naoki. I agree with your point. From Japanese investors or a company standpoint, looking at current geopolitics in the globe, Chinese business are getting tougher and tougher, particularly capturing its [ trade ] business between China and U.S., et cetera. So naturally, the directions or attention are more coming to Southeast Asia and India. That's macro sentiment. Also looking at the potential or depth in the market among all country, possible countries, this Indonesia have the largest potential needless to say. So I expect more attention to come from Japan going forward. The challenge is with political stability as well as the fiscal stability of Indonesian government will continue on. We hope that will continue, but that can be some in a caveat Japanese corporate, whether they increase the investment more in this country, one. But overall, as Pak Naoki was explaining, generally, I'm hearing the positive sentiment even after the election. Thank you.

Thank you, Pak Naoki, Pak Ejima. The last couple of questions, I believe this is directed to Pak Mul. So the first one is about asset yield, which essentially increased quite meaningfully in 2023. Question is, should we expect the trend to continue in '24? And what will be the driver? Also, I think how much is the typical loan yield in each of our business pillars, Pak Mul?

Okay. Thank you for the question, Yogi. So if you look at the Danamon profiles, look at our 4 major engine basically, it's coming from the EV business, Adira Finance, then SME and consumer. So we were able to improve our yield not only because of the -- first, I think the cause of the growth -- strong growth in Adira and as well and in EV, yes. And other than that, we also improved our yield in the treasury assets, which is like government bonds. Going forward, I think it will depend to the -- whether we are able to grow in the asset that we would like to which is like, for example, like Adira, EV as well as in various assets that we have like treasury assets here. Like mortgage, I think, as you may be aware that for the first few years, due to the nature of the business, we have fixed rates. But over time, when we come floating is will benefiting us, but it takes time before it become a floating. I hope I can address the questions, Yogi.

Okay. Sure. Thank you, Pak Mul.

Maybe I'll try to address that.

Yes, please.

A little bit about yield. From time to time and becoming quite often, we also link the loan yield with the ancillary business that clients are giving us. So at the current market, sometimes loan yield is getting more competitive, but we also look at the total profitability return. And we look at the one example, the ForEx volume and so on and so forth. So that is basically the overall return for us in addition to the yield itself.

Thank you, Pak Mul and Pak Thomas. We'll be later on in the data on each segment, we're already in touch on that data. Last questions for Pak Mul. I think this is about CASA dynamics in '23, in the comment is on a year-on-year basis, CASA declined 10% but on Q-on-Q, it's gained 9%. And then the question is what drove the fluctuations in '23? How much can Danamon's existing digital banking innovation push for CASA base improvement in 2024? Pak Mul, maybe later on can be supplemented by Pak Hafid as well and Pak Honggo on the digital side. Thank you.

Maybe I can start first. Thank you for the question. Yes, I think in terms of CASA, we know that for some banks willing to pay high-cost CASA. So what we have in our strategy, basically, we focus on growing the sustainable CASA instead of competing the high-cost CASA. As you have here the comment from the explanation from Pak Ejima that we have invest in many things since MUFG become the main shareholder of Bank Danamon. Yes, we invest in the IT infrastructure, digital capabilities, people and branding. On the digital capabilities, we improved our channels, yes, digital channels, which is like D-Bank PRO as well as Danamon Cash Connect. In addition to that, we also improved our physical appearance of the branch through the bank's transformation. With that, we hope that we can engage more with the customer. We hope that customers are able to transact using our platform. We have seen that the good traction, good early traction, both in the digital transaction as well as in the branding, in the transaction through branding. So we also enforced in the many events to promote the business expansion and customer acquisitions which is like currently, we have the IIMS 2023 in automotive. We're also actively sponsoring DXPO, bright story, yes. And we hope that for the rest of the year, we will continue our engagement with the customer. Despite that, our CASA lower compared to last year. But our granular funding, which consists of CASA and TD regular, increased by 10%. Now you're asking about what happened in the last quarter. In the last quarter of the year, basically, what we try to -- because the intense competition in the market on the fundings, we also try to test our relationships. Then what happened, we try to test whether the customer really has relationship with us. Then by increasing our pricing a bit, then past that, we got the volume. So through that, we believe that relationship with customer is always there. And the reason we don't do it like other banks, we don't want to compete in a high-cost CASA. Thank you, Yogi. I hope I addressed the question.

Thank you, Pak Mul. Well answered. I think that's the last question we have for today. Ladies and gentlemen, the respective investors and analysts, once again, thank you for taking part in the PT Bank Danamon Indonesia Tbk's Financial Results for Full Year 2023. For any further interest and questions, which I believe you already have, and we will continue having one-on-one meetings and also, please do not hesitate to reach us to our Investor Relations mailbox at [email protected]. See you in the next Danamon's corporate event. Thank you, and have a good day. Bye, everyone.

Bye.

Thank you.