October 2016 4th Week

28 october 2016

Categories : IR Weekly Review


  • MACRO
    • The Federal Reserve may have to keep interest rates low for a longer time in order to convince investors and the public that central banks are serious about achieving the inflation target of two percent, Chicago Federal Reserve President Charles Evans, said on Monday (October 24th 2016). With inflation running too low, both in the United States and globally, the Fed needs to demonstrate its commitment to achieving the inflation target "sustainable, symmetrical, and faster," Evans said in slides prepared for a speech in Chicago. To do that, he said, might require "the unemployment rate below the limit (undershooting) and exceeded the limit of the inflation target (overshooting)." Inflation has been running below two per cent since 2012 and unemployment is currently at five percent, the range within which many economists believe is consistent with full employment. Evans, who will rotate into the owner of voting rights of the Fed's policy panel next year, has been among the loudest voices that the Fed should do the patient and gradual approach in raising rates. He did not refer to the speed of interest rate hikes preferably in person, and instead said that he would like to see the pace of interest rate hikes associated with progress on inflation.

    • Yen will potentially become weaker as the steps the Bank of Japan (BOJ) would continuously pour stimulus in anticipating of rising interest rates of the Federal Reserve. On Tuesday (25/10) at 18:22 pm The yen fell 0.35 points, or 0.34% heading to 104.53 per US dollar. At the same time, the US dollar index fell 0.02% to 98.74 Heizo Takenaka, Japan's minister of economy of the period from 2002 to 2005, said the increase in interest rates the Federal Reserve in December 2016 would be a good opportunity for the BOJ to lower interest rates. It was aimed at weakening the yen. "I think the BOJ are waiting the opportunity to lower the value of the yen. The opportunity is there when the Fed raised interest rates," he said as quoted by Bloomberg, Tuesday (25/10). The declining trend of the yen began after Prime Minister Shinzo Abe held power in late 2012 through monetary easing. The decline of yen helped raise the performance of the domestic market and the company, but lowered exports in the last 12 months. Comments from Takenaka seems to be a message for the BOJ to be run board of governors meeting on October 31 to November 1, 2016. At the meeting the previous month, the central bank focuses peg the government bond yields around zero and keeping interest rates -0.1%.

    • Review:

      The Fed interest rate hikes will affect the developing countries, especially Indonesia. However, if inflation in the country can stay awake 4 plus minus 1 percent, then it can bring a sense of optimism / optimism for Indonesia.

  • MICRO
    • Bank Indonesia (BI) will soon issue regulations supporting commercial paper trading or Commercial Paper (SBK) in the money market. With the SBK regulations, good corporate financial and non-financial sectors can obtain short term financing beyond bank’s credit facilities. Senior Deputy Governor of Bank Indonesia Mirza Adityaswara said that Securities Commercial was a short term securities that had the potential to be developed as an alternative funding by corporations, in addition to funding from bank loans and short term investment alternative by investors. SBK could be an alternative company to obtain additional capital by selling their securities in the tenor of 360 days or one year. Currently, the Bank is reviewing the Bank Indonesia Regulation (PBI) related to the issuance of Commercial Paper (SBK). "Commercial paper is an instrument in which a corporation or financial institution usually non-bank issuing a bond. But arguably, money market instruments in Indonesia are still very shallow. The needs  of cooperative funding and non bank financial institutions are quite large," said Mirza in the Seminar Letter Commercial valuable in Jakarta, Monday (24/10/2016).

    • The Financial Services Authority (FSA) claims there are 3.5 million new accounts were opened during October 2016. Accounts community is spread across multiple financial services industry, such as banks, mutual funds, pension funds, up to a pawnshop. Chairman of the Board of Commissioners FSA Muliaman D Hadad said, him and the financial services industry had been conducting activities of financial inclusion. With the motto of Financial Inclusion for All, the FSA saw their public interest to start saving. "We report financial inclusion have registered their new account opening during October alone throughout the financial services industry in the amount of 3,546,477 accounts," he said at the JCC, Jakarta, Monday (31/10/2016). Hadad detailing, opening of accounts covering third party fund account 3.388.267, 12.482 insurance policies, investment accounts on the capital markets 14,880, on account of the Pension Fund 665, account 14.321 loan accounts, savings accounts as many as 115.862 gold account. According to him, public access to the financial services industry is also facilitated through a network of Conduct Smart and digital financial kites. "Thus, the activities of saving does not have to go to the city and can be done 24 hours we can save at night," he added.

    • Review:                                                                                                                                                                                                

      The existence of Commercial Paper can supplement the money market yield curve. If the Commercial Paper is enough liquid to be traded on the money market, it can be pretty credible reference price for the indicative price of short-term securities for the corporate sector other financial market participants.

  • BANKING
    • PT Bank Rakyat Indonesia Tbk (BRI) is planning to increase its loan portfolio remains selective and prudent in accordance with the conditions of the economy, with a growth target range of 13% -15%. Director of BRI Asmawi Syam said, Bank BRI will also remain focused on reinforcing cheap funding through third party funds and the issuance of bonds with competitive interest rates. "In addition, together with efforts to strengthen fee-based income through the development of digital banking in the form of terraces BRI digital with a target of 560 outlets from 2,560 units terrace existing ones, to increase the share of ownership in the subsidiary as well as an increase in capital for the subsidiaries through a secondary public offering and issuance of sub debt sukuk, "he said in Jakarta, Tuesday (10/25/2016). To ratios, in 2016, Bank BRI targets NPL (Non Performing Loan) or non-performing loans was at 2.1% -2.4%. "While the LDR in the range of 87.0% -90.0% and 20.0% CAR in position," said Asmawi. Furthermore, the capital performance of a healthy, stable and sustained and supported by a network of optimal work unit, Bank BRI is optimistic to achieve net profit growth or corporate profits in the range of 1% -2% in the 2016's.

    • PT Bank Mandiri Tbk (BMRI) continues to strengthen its role as an intermediary institution to promote the national economy. This is demonstrated by the annual credit growth of 11.5% at the end of September 2016 be Rp 625,1 trillion of Rp. 560,6 trillion in the same period the previous year. From these achievements, earning the company's loan portfolio stood at Rp. 481,4 trillion, or 85.9% of total loans Bank Mandiri (bank only), increased Rp.48,2 trillion, up 11.1% from the same period last year, primarily driven by growth in credit working capital increased Rp. 38,1 trillion or grew 14.0% to Rp.309,4 trillion. Director of Bank Mandiri Kartika Wirjoatmodjo said, these achievements cannot be separated from the company's commitment to support the government's development program to strengthen the national independence and improve competitiveness. As an agent of development in infrastructure financing, the bank has disbursed loans amounting to 51.3 trillion infrastructure or grew 27.0% yoy, which is channeled to finance the toll road Rp. 8.4 trillion, Rp17.6 trillion electric power, transportation of Rp. 17, 2 trillion and telecommunications Rp8,2 trillion. "Infrastructure is a strong will become the backbone of the national economy, especially the challenge of geographic Indonesia consists of thousands of islands spread. Therefore, we will continue to consistently support the realization of infrastructure projects of government," he said in a press conference in Jakarta on Tuesday (25/10/2016). By segment, the company continues to increase lending to the whole business with the highest growth in the micro segment reached 16.7% to Rp. 46.7 trillion in September 2016.

    • Review

      NPL is an important benchmark in determining whether a bank is able to control the loans. Increasingly high NPL can be concluded that the bank has not been quite able to control the existed loans, and NPL also is very influential on the health of banks and banking business existence.

Disclaimer : This document is for informational purposes only and obtained from a variety of reliable sources, but is not a guarantee the accuracy or completeness and should not be relied on completely. The above conditions may be changed at any time. Forbidden to rewrite anything without written permission from The East Java Regional Development Bank