INDONESIA - BANKING - Muamalat and Sharia Mandiri tighten domination on market share

JAKARTA: PT Bank Muamalat Indonesia Tbk and PT Bank Syariah Mandiri keeps dominating Indonesia's sharia banking industry, amidst other competitors' late network expansion start.

 

Through mid June, more than half of net profit of sharia banking industry goes to those two major banks. The accumulated profits of both banks reached 52% of total IDR777 billion net profits in the industry during the first half of the year. (source)

 

Being the Indonesia largest sharia bank in term of asset, Bank Syariah Mandiri (BSM) recorded net profit of IDR270 billion in the first half of the year, increasing 36.64% from IDR198 billion in the earlier year period.

 

Following in the second place, Bank Muamalat posted progressive net profit--better than BSM in term of growth--by increasing 72.62% to IDR141.24 billion from IDR81.82 billion.

 

Both banks' domination was partly caused by the late expansion by other sharia banks on building infrastructure and network as many of them just being spinned off their parent companies recently.

 

As explained by BSM President Director Yuslam Fauzi, the largest profit contributors were margin income and profit sharing, both reached IDR1.79 trillion or increasing 39.84% from IDR1.28 trillion in June 2010.

 

The subsidiary of PT Bank Mandiri Tbk's profit growth was in line with its financing performance, grew 51.28% to IDR30.06 trillion. This above average performance brought its financing market share higher, to 36.38% this year from 35.01% last year.

 

Meanwhile, Bisnis' data showed the market share financing of Bank Muamalat reached 23.97%, compared to total credit of IDR82.6 trillion of all sharia banks in Indonesia.

 

Bank Muamalat recorded IDR19.8 trillion of financing in the first half of the year, increasing 55.05% from IDR12.77 trillion in the earlier year period, according to Finance and Operating Director Hendiarto.

 

 

Strategy

 

Both banks have similar strategy in increasing credit, by expanding retail (non-corporate) credit portfolio and getting their corporate loan restrained.

 

BSM lifted its non-corporate financing portfolio to 69.4% in the six-month period, increasing from 66.6% at end of 2010. At the same time, corporate loan dropped to 30.6% from 33.4%.

 

“We retain the disbursement for major companies and focus on small loans,” Yuslam said over the weekend.

 

Bank Muamalat has reduced the portion of corporate loan to 43% as of December last year from 48%, while the portion of non-corporate loan grew to 57% said Andi Buchari, Director of Compliance and Risk Management.

 

However, both banks have different strategies in micro financing. Taking part in disbursing Small Business Loans, BSM provides not only direct but also linkage loans.

 

Bank Muamalat, on the other hand, avoids giving direct loan and focuses on linkage since it does not want to be a new competitor for micro financing companies. (t04/ags)

Source : http://en.bisnis.com/articles/muamalat-and-sharia-mandiri-tighten-domination-on-market-share  - Sept 5, 2011