Bank Pembangunan Daerah (BPD) or Bank Banten has started its turnaround. Bank Banten recorded a net profit of Rp9.50 billion in November 2023. This profit increased by 106.96 percent year on year (yoy) compared to November 2022, which incurred a loss of Rp136.55 billion.
This achievement marks a turning point for Bank Banten, which had never experienced a profit since its establishment. When it was acquired by the Banten Provincial Government through PT Banten Global Development (BGD) and began operating in 2016, the bank always incurred losses. By the end of 2022, this BEKS stock-coded bank was still suffering from a loss of Rp239.29 billion.
Bank Banten’s profit was supported by a 24.64 percent increase in net interest income, amounting to Rp185.29 billion. At the same time, the company was able to significantly reduce operating expenses to Rp149.90 billion, a decrease of 53.75 percent. The decrease in operating expenses is a result of Bank Banten’s efficiency strategy, including renegotiating collaborations with third parties.
From an intermediation perspective, loan realizations experienced a slight growth of 0.96 percent, amounting to Rp3.69 trillion. Meanwhile, third-party funds (DPK) contracted by 15.69 percent, reaching Rp4.15 trillion. The decrease in DPK is in line with the company’s strategy to reduce the cost of funds. Funding from expensive sources is continuously reduced, while the growth of cheap funds or CASA is encouraged.
Muhammad Busthami, the President Director of Bank Banten, stated that besides profitability, other financial indicators also show improvement. The net interest margin (NIM) improved to 4.05 percent. The ratio of operating expenses to operating income (BOPO) also decreased to 93.58 percent, much lower than 124.90 percent in November 2022. This is the first time that Bank Banten’s BOPO has been successfully reduced below 100 percent.
According to Busthami, Bank Banten’s management feels a sense of obligation to achieve a positive profit in 2023. Positive performance will have an impact on the work ethic of Bank Banten employees (Banteners) and increase stakeholders’ confidence.
“We hope that Banteners will have enthusiasm. We have never been profitable before, but now we have started to make a profit. From there, we hope to see an improvement in work ethic. Externally, this will certainly boost stakeholders’ confidence, existing customers, and strategic investors,” he said to Infobank in December 2023.
Stakeholders’ confidence is indeed important for the future sustainability of Bank Banten. Moreover, the bank is currently trying to attract eight districts/cities in Banten to join as shareholders and entrust the management of the Regional General Cash Account (RKUD). Until now, Bank Banten has only managed RKUD for the Banten Provincial Government.
In addition to its performance, the change in Bank Banten’s status to a Regional-Owned Enterprise (BUMD) is also noteworthy. This status change will have a positive impact on the development of Bank Banten. BUMD status is also one of the requirements proposed by the potential parent bank if Bank Banten wants to join the Joint Business Group (KUB).
Muhammad Faizal, Chairman of the Banten Regional People’s Representative Council (DPRD) Commission III, revealed that the status change to BUMD will be finalized soon. Subsequently, the KUB process can be carried out promptly. Commission III, as a working partner, continues to encourage Bank Banten to become a regional development bank equivalent to other regional development banks such as Bank BJB, Bank DKI, Bank Jateng, and others.
“Bank Banten is encouraged to continue improving its profitability, seeking cheap funds, and remaining selective in credit disbursement,” he said to Infobank.
Meanwhile, Virgojanti, the Acting Secretary of the Banten Provincial Government, stated that as a shareholder, the provincial government hopes that the KUB process can be completed by the end of 2024. KUB not only helps Bank Banten meet the minimum capital requirements but also promotes synergy and excellence in terms of products, services, and technology.
“Therefore, a strategic partnership with the parent bank of KUB will accelerate the growth and strengthen the institution of Bank Banten in the medium and long term,” said Virgojanti.
Read the complete report on Bank Banten’s strategy to end its “Curse” of Losses Since Birth in Infobank Magazine No. 549 January 2024 Edition. (*) Ari Astriawan.