JAKARTA, NETRALNEWS.COM - Citibank N A Indonesia (Citibank) has obtained net profit of IDR1.9 trillion in the third quarter of 2020. This was conveyed by Citibank Chief Executive Officer (CEO) Batara Sianturi during a virtual presentation on company performance, on Thursday (11/12/2020) in Jakarta.
Batara said that despite the economic uncertainty, the company was still able to create positive performance, and managed to obtain Return on Equity and Return on Assets of 15 percent and 3.9 percent, respectively.
During this period, Citibank also increased the allowance for credit losses, in line with the impact of the ongoing Covid-19 pandemic. Despite this, the company continued to report stable gross and net Non-Performing Loans (NPLs) of 2.8 percent and 0.3 percent, respectively.
Citibank's loan portfolio at the end of the third quarter grew 6 percent year-to-date to IDR47.4 trillion. The main contribution to loan portfolio growth came from the Institutional Banking business line, particularly in the manufacturing, agriculture and forestry sectors, as well as financial intermediaries.
"Our credit growth is encouraging despite being in challenging conditions due to the Covid-19 pandemic. Lending growth on an annual basis or year on year (yoy) reaches six percent, and year to date (ytd) touches six percent as well," Batara said.
Batara explained that the credit portfolio growth was supported by sustainable Third Party Funds which grew by 10%, thus enabling Citibank to have healthy loan-to-funding (LDR) ratio of 76.6 percent.
"Third party funds have grown by 10 percent ytd, and year on year, it has risen by four percent. So, Citibank's performance is quite encouraging, despite the ongoing Covid-19 pandemic," he added.
Apart from that, Citibank also has a very good level of capital adequacy ratio of 26.5 percent.
"In the midst of the uncertainty caused by the COVID-19 pandemic, we are committed to continuing to maintain liquidity levels and increase capital adequacy. Our balance sheets have the capacity to continuously serve the needs of our customers. With a strong emphasis on risk management, we will continue to serve with care in these challenging times, ”said Batara.
On the same occasion, Chief Economist at Citi Helmi Arman said Indonesia's economic recovery will continue for the several quarters ahead.
The resumption of reforms through the Omnibus Law has provided positive signal for global investors. Meanwhile, there is significantly rapid recovery of exports, and global investor interest in investing in Indonesian assets has began to recover at a time when imports were still relatively weak.
This combination has helped to improve the balance between supply and demand for foreign exchange (forex) on the forex market, which has resulted in the strengthening of the Rupiah.
"The omnibus law is quite a big breakthrough, as there has never been a policy and regulatory reform of this magnitude before. So far, our interactions with investors and corporate clients have been positive in overall, since the policy is quite timely and right on time," Helmi said.
He continued that the omnibus law would encourage more investment inflows to Indonesia. Previously, many global investors chose Vietnam for investments. However, the situation has now changed due to the Vietnamese market that is getting saturated.
"Indonesia's standing when compared to Vietnam has started to improve. So far, a lot of it (investments) has flowed to Vietnam. However, it is already overcrowded there, and many multilnational companies are looking for alternatives. Indonesia, with its omnibus, gives a strong signal for investments, thus enabling to support efforts to get out of the middle income trap," Helmi said.
This year, Helmi estimates Indonesia's economic growth will still be corrected, namely at minus 1.9 percent. For 2021, economic growth is estimated to improve, and is projected to reach four percent.
In addition, amidst low inflation, Citi also estimates that currency stability could open up room for more interest rate cuts, which in turn could support economic recovery.