Private lender Bank Danamon (BDMN) targets at least 10 percent growth in its microloan segment, represented by the Danamon Simpan Pinjam (DSP) program, in 2015.
Danamon director Muliadi Rahardja said Wednesday the bank's microloan segment posted an average of 10 percent to 15 percent growth annually in its financing disbursement. "The micro segment has a lot of potential as it facilitates economic growth," he said.
At present, the bank has more than 400,000 microcredit customers that are served by more than
1,000 DSP units, most of which are located at markets. A 10 percent to 15 percent increase target will put DSP's portfolio at around Rp 24.08 trillion (US$1.89 billion) to Rp 25.17 trillion in 2015.
A majority of the growth next year would still come from the trade segment as it accounted for about 60 percent of DSP's total lending, Muliadi said.
However, he added that the agribusiness segment — in which it channels loans to palm oil, rubber, cacao and poultry businesses — offered higher growth potential than the microloan segment in general. "Agribusiness can post 20 percent growth yearonyear," he said.
In agribusiness, Danamon has so far disbursed Rp 1.9 trillion worth of micro loans at its 234 DSP units, shown by data from the lender. The total amount of micro loans themselves stood at Rp 19.67 trillion — equal to 14.2 percent of Danamon's lending portfolio — as of September.
The private lender also hopes that its advisory partnership with the International Finance Corporation (IFC) will spur higher financing in its agribusiness segment.
According to the agreement, the IFC will provide advisory services for microcredit customers at nine DSP units in Bandung, West Java; Malang, East Java; and Medan, North Sumatra.
By the end of 2015, they expect that the number of DSP units to offer the same services will
reach 90. "In the next three years, we hope to see around Rp 700 billion of agriculture financing channeled by these 90 DSP units," Muliadi said.
Meanwhile, to help achieve the overall microloan target in 2015, Danamon plans on operating several mobile units and open 50 smallerscale DSP units at the markets. "We want to penetrate new traditional markets that don't have that many merchants," he said.
Danamon suffered tough times in the first nine months of the year, with a slowdown recorded in all business segments.
The private lender reported recently that its net profits dropped 30 percent to Rp 2.11 trillion year - on year in the January to September period.
It attributed the drop in profits to a new regulation on premiuminsurance calculation that was implemented by the Financial Services Authority (OJK), beginning in March. The ruling affected the bank's insurance business, currently run by subsidiary Adira Insurance, which provides automotive, property, heavy equipment and marine cargo policies, to name a few.
Additionally, the increasing cost of funds and lower lending growth also led to a decline in profits throughout January to September.
By the end of September, the bank's net interest margin (NIM) stood at 8.4 percent, down from the
9.8 percent booked last year. The bank hoped its NIM would improve in the fourth quarter, supported by a capping policy on the time deposit rate that the OJK began imposing in October.