Consistent with Indonesia’s robust economic growth, the domestic banking industry continued to post significant gains in 2011. Total assets of banks in Indonesia stood at IDR 3,653tn as of December 2011, an increase of 21.4% year on year, while the asset quality remained strong over the same period. Total lending reached IDR 2,200tn in 2011, up 24.6% year on year. The increase occurred across all segments, both for working capital and consumption loans for both business and consumer lending.

On the funding side, total third party funds grew 19.1% year on year to IDR 2,785 in 2011, with increases in funding across all types of third party funds (savings, time and demand deposits). Faster paced growth in lending compared to that of funding resulted in a higher loan-to-deposit ratio (LDR) in 2011.

The overall performance of the Indonesian banking system improved in 2011, with banks achieving higher net interest margin (NIM) of 5.9% and industry’s profits rising to IDR 75tn. The banking industry’s capital also remained at a healthy level at 16.1% due to strong sector profitability.

The five leading banks in Indonesia recorded strong financial performance in 2011, thanks to favourable economic environment. Total loans were up with strong growth across all customer segments, while net income increased due to strong growth in lending and transaction accounts.

Key Points:

• Total third party funds increased across all types in 2011, with saving deposits recording the highest growth rate of 22.5% year on year, followed by demand deposits (21.8%) and time deposits (15.3%).

• The industry’s net profits reached IDR 75tn in 2011, up 31.6% from IDR 57tn in 2010 with strong growth in NIM and loan portfolio.