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KB Bank's Turnaround Journey
Towards Profitability
Public Expose
2024.12.20
PT Bank KB Bukopin Tbk berizin dan diawasi oleh Otoritas Jasa Keuangan dan Bank Indonesia,
serta merupakan peserta penjaminan Lembaga Penjamin Simpanan.
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Management Highlights Macro Economy & Guidelines
Page 3
KB Bank’s Key Transformation Highlights
Before Transformation (~ 2021) Current (up to September 2024)
• Capital Constraints: Limited capacity for expansion • Strong Capital Base: Capital Adequacy Ratio (CAR) exceeds
with a Capital Adequacy Ratio (CAR) of ~12%. 20%, ensuring robust capacity for growth.
• Asset Quality Concerns: Elevated Loan at Risk (LAR) • Improved Asset Quality: Significant reduction in Loan at
levels of ~65%, signaling significant credit risk Risk (LAR) to <25%, reflecting strengthened credit risk
exposure. management.
• Liquidity Challenges: Liquidity Coverage Ratio (LCR) • Enhanced Liquidity: Liquidity Coverage Ratio (LCR)
at ~90%, reflecting insufficient buffer to cover short- increased to ~163%, well above the regulatory benchmarks.
term obligations.
• High Liquidity Risk: Excessive Loan-to-Deposit Ratio • Balanced Liquidity Risk: LDR reduced to ~97%,
(LDR) of ~135%. demonstrating a better funding management
• Weak Performance: Net Interest Income below IDR • Improved Performance: Net Interest Income surpasses IDR
400 billion; Net Interest Margin (NIM) at a low 0.6%. 750 billion; Net Interest Margin (NIM) improved to 1.46%.
• Negative Operating Performance: Pre-Provision • Positive Operating Performance: Pre-Provision Operating
Operating Profit (PPOP) recorded at nearly negative Profit (PPOP) turned positive at IDR 28 billion, marking a
IDR 2 trillion. return to profitability.
• Outdated Systems: Reliance on an old core banking • Advanced Systems: Transition to a new generation banking
system, hampering operational efficiency. system (NGBS), leveraging proven technology from South
Korea.
• Inconsistent Risk Management: Non-standardized • Standardized Risk Management: Centralized loan approval
loan approval processes leading to elevated risk process implemented to ensure consistent and prudent risk
profiles. practices.
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Macro Economy: Key Highlights in 2024
In 2024, the global economy faced slowing growth, geopolitical tensions, and volatile energy prices, while Indonesia managed steady
rates, a weaker rupiah, and policy shifts under new leadership amid easing monetary trends.
Q1/2024
• Bank Indonesia (BI) raised • Prabowo Subianto was elected as President of Indonesia.
its benchmark interest rate • China's economy post-COVID slowed, with Q1 GDP growth
by 25 bps to 6.00%. only 4.5%.
Q2/2024
• Middle East tensions escalated as Israel launched attacks on Iran in April.
• Bank Indonesia maintained its benchmark interest rate at 6.00%.
• Indonesia's GDP growth slowed to 4.9% amid subdued global trade.
Q3/2024
• China's slowed further, due to a weakening property sector. • Supply cuts and rising
• IDR depreciated against the USD, prompting BI to geopolitical threats caused
intervene for stabilization. oil prices rise >$95/ barrel.
Q4/2024
• Interest rates began a downward trend as the Fed and Bank Indonesia cut benchmark rates.
• Donald Trump was re-elected as President of the United States in November.
• Indonesia announced a new 12% value-added tax, effective January 2025.
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KB Bank’s Strategic Milestone in 2024
• 27 Mar – KB Bank partners with • 20 Jun – KB Bank provides IDR 700
United Tractors to expand financial billion financing for Mayapada
access for heavy equipment Hospital expansion and equipment
purchases. purchases.
• 6 Jun – KB Bank earns BBB • 20 Nov – KB Bank maintains its
international rating with stable idAAA rating with a stable outlook
outlook, matching Indonesia’s from PEFINDO.
Sovereign Credit Rating.
• 22 Mar – Enables cardless • 30 May – KB Bank boosts MSME • 19 Aug – KB Bank collaborates • 31 Oct – By the third quarter of
withdrawals at all Indomaret financing with KUR distribution and with KB Valbury Sekuritas to
2024, KB Bank recorded an 84.15%
stores via KBstar. Linkage Program collaboration with enable seamless RDN opening via
growth in net interest income.
BPR Modern Express. KB ARA app.
• 6 Mar – KB Bank partners with • 30 Oct – KB Bank has appointed
OttoDigital to support MSMEs • 27 May – KB Bank collaborates with U-20 Indonesia National Team
through Kredit Usaha Rakyat (KUR). APP Indonesia for innovative vendor
soccer player Ji Da Bin as the brand
financing solutions.
ambassador for KBstar.
• 16 May – KB Bank partners with PT
Daimler Commercial Vehicles
• 3 Mar – Company unveils its new Indonesia for dealer financing.
rebranded name and logo from KB
Bukopin to KB Bank.
• 5 Feb – Collaborates with Bintan • 18 Apr – Fitch affirms KB Bank’s • 22 Jul – KB Bank has been
Regency Government to address idAAA rating, underscoring its appointed by KSEI to serve as the
subsidized diesel fuel scarcity. stability and sustainable administrator of the RDN and as
practices. the payment bank.
• 25 Oct – KB Bank successfully
• 24 Jan – EGMS appoints Seng Hyup debuted its global bond issuance,
Shin as Deputy President • 16 Apr – KB Bank secures $300M • 19 Jul – KB Bank teams with PFC a $300 million Senior Unsecured
Commissioner and Jang Hyuk Im as long-term loan from Korea Technologies to enhance pension Notes offering, which was
Director. Development Bank. and SME loan assessment using AI. oversubscribed 4.5 times.
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Strategic Agenda 2025-2027
M
“Maximize
O
“On The
V
“Versatile
E
“Empowered
Growth” Market” Talent” Biz through
Digital & IT”
“Improve NIM by Focus on “Care and Skilled Employee
“Redefined Brand, “Highlight IT & Digital as
Increasing Normal Loans, Ready to Compete
Enhanced Experience” Business Enablers”
Managing COF & Fee Biz” in Market”
1.
1 Strengthen Core 4
1. DPD Management &
7 Prepare Human Capital for 10 NGBS Implementation with
Competence in the Optimize Recovery from Digitization and Align with Proactive Support
Wholesale Segment Bad Asset Business Focus from All Employees
2.
2 Rebuild SME & Enhance 2. Enhance Branch Models to 8 Develop Employee to be Top 11 Maximize Current IT &
5
Retail Capabilities Align with Business Potential Talent Digital Capability to Create
3. and Technological Trends “KB Ecosystem”
3 Activate Fee Income 9 Risk & Compliance Culture
through Cross Sell & HQ 6 Customer First Mindset
3.
Specialist Support
Nagaja Igija
Win!
Go! Sauja
Fight! “Moving Forward Together” 6
Page 7
Business Highlights Growth Drivers & Strategic Approach
Page 8
KB Bank Business Growth Plan
KB Bank’s Vision
Step III
KB Bank’s Current Position Step II Differentiated Competitive Advantage
Step I Catch-up Strategy
Innovation
Imitation
• To gain a competitive advantage in
Deep Change
a specific field, it's essential to build
• Quickly adopt a proven market
expertise that surpasses peers.
success model by emulating the
• Fundamental recovery of manpower • In addition, innovative and
leading player.
and channels capability differentiated strategies are
• Integrate best market practices and
• Restructuring of bad assets, required to stay ahead.
develop them to stay highly
• Renewal of business and
competitive.
management process
• Rebuilding salesforces for growth
Continuous alignment of strategy, processes, systems, and manpower
will keep KB Bank on track to achieve its goals.
Restoring all of the basic ‘Imitating’ a market leader and Leading the market through
infrastructure and functions internalizing its competency ‘Innovation’
Strengthen human capabilities with ongoing restructuring Level up people by education program
i) initially optimize salesforce / ii) secondly, redeploy staff of core functions Build strong corporate culture
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Business Strategy - Wholesale
9M-2024 2025 ~
Total Portfolio Normal Loan* Key Initiatives:
Rp16.07 tn.
• Targeted Lending:
Focus on high-growth sectors—Mining, Healthcare, Infrastructure, and Consumer
Products—offering integrated solutions like SCF, trade finance, and funding
40.66% yoy products to boost revenue and reduce COF.
• Enhanced Cross-Selling:
Total Portfolio Korean Link Business
Drive funding placements and promote KB Starbiz, consumer loans, and trade
Rp5.49 tn. finance through wholesale collaborations.
• Market Leadership:
73.46% yoy Pursue a top-10 bank position through asset growth, NIM, NPAT, and fee-based
income streams like syndications, FX, and swaps.
Total New Loan** • Relationship Deepening:
Rp4.17 tn.
Strengthen ties with SOEs, large corporations, and Korean-linked companies,
targeting 20% annual growth by building on previous successes.
0.76% yoy
Total Loan at Risk
Rp4.24 tn. • Product Innovation:
Deliver market-driven product enhancements to sustain growth and reinforce
53.18% yoy leadership in competitive markets.
* Normal loans represent high-quality assets characterized by strong current loan performance.
** New loans are loans taken out by either new customers or existing customers who open a new loan account. 9
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Business Strategy - SME
9M-2024 2025 ~
Total Portfolio Normal Loan* Key Initiatives:
Rp3.15 tn.
• Products & Programs:
Strengthen Supply Chain Financing (SCF) by refining existing products,
automating processes, and expanding to Indonesia’s Top 100
16.36% yoy companies.
Boost conventional loan portfolios while embedding cross-selling as a
Total New Loan**
core sales culture.
Rp1.49 tn. Attract SME debtors from reputable banks by offering value-added SCF
solutions and fostering trust in KB Bank.
41.86% yoy
• Process & Policy:
Total Loan at Risk Accelerate and automate credit processes, including monitoring and
Rp3.47 tn.
loan renewals, to improve efficiency and minimize audit findings.
Launch a streamlined Swamitra Policy and implement self-service
digital channels to enhance customer experience, reduce costs, and
53.59% yoy shorten turnaround times.
• People Development:
Achieve a 20% increase in sales team productivity.
Ensure all SME staff possess strong credit knowledge, sales skills, and
adhere to a high-performance work culture.
* Normal loans represent high-quality assets characterized by strong current loan performance.
** New loans are loans taken out by either new customers or existing customers who open a new loan account. 10
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Business Strategy - Retail
9M-2024 2025 ~
Total Portfolio Normal Loan* Key Initiatives:
Rp10.96 tn.
• Customer Deposits:
Expand digital aggregators and target new communities, including schools
and colleges, to drive the RDN campaign.
12.77% yoy
• Pension Loans:
Total New Loan** Revamp the sales organization, processes, and management with a branch-
Rp2.14 tn. centric approach. Strengthen partnerships with state-owned and private
companies.
65.29% yoy • Wealth Management:
Leverage digital aggregators and diversify marketing channels to broaden
Total Loan at Risk
reach.
Rp2.09 tn. • Credit Cards:
Build partnerships with merchant aggregators and launch telesales and
16.57% yoy
direct sales programs to boost growth.
• Mortgages:
Innovate products, diversify offerings, and revise credit acceptance criteria
to accommodate non-fixed income segments.
* Normal loans represent high-quality assets characterized by strong current loan performance.
** New loans are loans taken out by either new customers or existing customers who open a new loan account. 11
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Financial Highlights As of September 2024
Page 13
Optimizing Asset Quality for Sustainable Business Growth
Loan Growth Total Loan – (Rp tn.) Total Loan by Segment – (Rp tn.)
-0.83 % Normal Loan LAR Wholesale MSME Retail
54,56 54,56
Normal Loan Growth 45,98 44,18 43,96 45,98 44,18 43,96
21.16 %
35,12 39,99 13,21 39,99
22,64 17,33 19,06 13,08 12,28 12,24
9,81 13,06
22,70
14,19 10,58 11,25
30,18 6,62
26,86 24,91
23,35 21,33 20,48
New Loan* Growth 19,43 18,64 18,71 20,31
19.12 % 2021 2022 2023 9M/23 9M/24 2021 2022 2023 9M/23 9M/24
LAR Amount New Loan* by Segment – (Rp tn.) Asset Quality Ratios
-48.51 % Wholesale MSME Retail LAR Ratio NPL Gross NPL Net
9,01
LAR Ratio 7,66 7,79
64,38%
24.92 %
1,76 49,23%
6,54 43,35%
1,67 1,23 2,14 39,22%
1,29
1,40 6,01 1,49 24,54%
3,47 1,05
4,59 4,20 4,17 10,66% 9,56% 11,06% 9,43%
0,97 6,56%
Capital Adequacy Ratio 0,64
20.14 %
1,85
4,91% 4,84% 4,88% 4,75% 4,89%
2021 2022 2023 9M/23 9M/24 2021 2022 2023 9M/23 9M/24
* New loans are loans taken out by either new customers or existing customers who open a new loan account. 13
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Advancing Towards Stronger Performance
Net Interest Income Chg. Net Interest Income – (Rp tn.) Other Operating Income – (Rp tn.)
84.15 % Net Interest Income NIM Loan Yield
0,85
Net Interest Margin 0,75
900,0
0,69
14,00%
0,59
800,0
1.46 %
12,00%
0,61 8,73% 0,48
700,0
7,09% 0,43
10,00% 600,0
8,00%
6,00% 6,03% 0,41 500,0
6,00%
400,0
0,28
6,96% 0,15
300,0
1,46%
Loan Yield 1,17%
4,00%
1,00% 0,78% 0,66%
200,0
8.73 %
2,00%
100,0
0,00% -
2021 2022 2023 9M/23 9M/24 2021 2022 2023 9M/23 9M/24
Other Ops. Income Chg. Other Operating Expense – (Rp tn.) Pre-Provision Operating Profit – (Rp tn.)
-10.56 %
2,77
Other Ops. Expense Chg. 0,03
2,17
-14.98 %
2,04
1,35 -0,47
1,15
-0,84
-1,05
PPOP Growth
105.98 %
-1,93
2021 2022 2023 9M/23 9M/24 2021 2022 2023 9M/23 9M/24
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Maintaining Healthy Liquidity Levels
Customer Deposit Growth Customer Deposit – (Rp tn.) CASA – (Rp tn.)
10.26 % Time Deposit Saving Acc. Current Acc. CASA CASA Ratio
51,25
CASA Growth
14000,0 40,00%
46,70 11,46
3,07 10,48
22.11 %
41,02 9,68
12000,0
3,20 39,04 37,20 9,13
35,00%
8,39
6,48
10000,0
8,58
2,73 4,46
6,40 3,32 6,01
8000,0
25,54%
30,00%
5,26 23,39%
22,36% 23,06%
20,74%
6000,0
25,00%
39,79 37,01
29,91 28,62 30,54
CASA Ratio
4000,0
20,00%
25.54 %
2000,0
- 15,00%
2021 2022 2023 9M/23 9M/24 2021 2022 2023 9M/23 9M/24
Cost of Fund Cost of Fund Liquidity Ratios
5.38 % LDR LCR
171,67%
Loan to Deposit Ratio 160,22%
147,96%
163,24%
97.48 %
129,92%
5,34% 3,92% 5,05% 5,05% 5,38% 118,17%
106,46% 113,18%
98,48% 97,48%
Liquidity Coverage
163.24 % 2021 2022 2023 9M/23 9M/24 2021 2022 2023 9M/23 9M/24
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2025 Turnaround Guideline
2024 2025
Strategic Theme Sound Fundamental Turnaround
Strengthening fundamentals Generating net profit
through strategic initiatives through business expansion
aimed at improving asset and a comprehensive cost
Key Focus quality and enhancing the reduction strategy focused
business foundation and on optimizing resource
capacity. efficiency.
Normal Loan Growth 21.16% 20%-25%
Loan at Risk Ratio 24.92% ~15%
CASA Ratio 25.54% 25%-30%
Net Interest Margin 1.46% 2.0%-2.3%
Capital Adequacy Ratio 20.16% 18%-20%
As of September 2024
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Thank You 감사합니다
Names mentioned 8 people and organisations named in the text · linked when the evidence is strong
unresolved
org
Bank Indonesia
p.1 ×4
unresolved
org
PT Daimler Commercial Vehicles
p.5
unresolved
org
Bank Business Growth Plan KB Bank’s Vision Step
p.8
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