Consumer Banking

In line with Indonesia’s growing purchasing power and maturing customer demands, consumer banking is one of the most dynamic sectors of the country’s banking industry as a whole. Changing lifestyles as a result of urbanisation are seeing an increased need for financing of key purchases such as automotive vehicles and mortgage services. Bank Mutiara has effectively positioned itself to serve retail customers throughout its nationwide network by establishing strategic partnerships, while offering continuous innovation in the products on offer.

In order to offer the most competitive products and rates for personal and consumer loans, Bank Mutiara has partnered with 26 multi finance institutions as well as integrated its payroll services to facilitate loans for corporate employees that do not require collateral.

This collaboration and streamlining of activities for customer benefit can also be seen within its mortgage products. For the past two years, the bank has cultivated partnerships with over 30 local housing developers such as Gapuraprima Group and Bakrieland Development to enable full scale financing for prime real estate purchases throughout the country. Further partnerships are expected in this area as the bank targets an increase in its housing credit portion to distribute 400 billion RP in 2011.

Savings & Deposits

Continuous research into the local market to bring responsive and value added products to customers is central to the Bank Mutiara philosophy. The bank offers a full range of current account options, savings and varied length deposit products while constantly innovating on the features that they offer both individual and non individual clients.

For 2012 the bank has concentrated on the long term benefits of its saving products to facilitate customers’ financial planning goals. The Mutiara Saving Plan helps customers meet saving targets over a fixed time period using comprehensive financial planning tools while Mutiara TAR Savings provides total freedom for cash withdrawals. The Mutiara Forex Deposit offers various currency denominations including EUR, JPY, USD and AUD for individual and corporate clients. In addition, it offers an automatic rollover service with term options of 1,3, 5 and 12 months. Within its savings range, the bank strives to offer return on investment, flexibility as well as value added services by including personal accident or accidental death insurance as part of its products.

For business customers, Mutiara Giro lets account holders save while still having the ability to carry out daily transactions and the Mutiara Forex Deposit gives a choice of currencies for alternative investments.

SME Banking

Creating tailored products for small and medium enterprises has been a determining aspect of the bank’s strategy to stay competitive among Indonesia’s more that 120 banks. From 2010, the SME banking division was separated from consumer banking and called Small Business Banking Unit (SBB) and Medium Business Banking Unit (MBB) in order to concentrate on what the country’s businesses need in terms of financing their growth strategies. The SBB unit offers a loan limit of up to 2 billion RP alongside business guidance and access to franchise financing through rural regional and cooperative banks. The MBB caters to businesses requiring loans from 2 billion RP and upwards with greater focus on providing commercial and corporate lending facilities to aid in the streamlining of different business units through strategic partnerships.

For Rural Trade clients, the bank offers a Working Capital Loan which is available as a revolving or a non revolving credit facility. Within the product set, clients can tailor their loan payment terms according to their working capital needs.

Increasing loan facilities to the SME sector mainly in the form of working capital loans has boosted the bank’s earnings performance and broadened its investment portfolio. Lending performance rose by 124% from 2009-2010, exceeding the targeted figures and is expected to rise by 60% for 2010-2011.

International Banking

As Indonesia’s international trading activity continues to diversify, Bank Mutiara has been laying the groundwork for its international banking division. Faced with the challenge of rebuilding trust among creditors over the course of 2009 and 2010, the bank is now on firm foundations to meet the needs of both local and international businesses.

During 2011, the bank focused on making the department more competitive by appointing International Business Officers and Treasury Business Officers to strengthen the sales force. As a result, the fee based and interest income from this division has risen steadily with even more striking results expected for the near future as the bank moves to establish credit partnerships with other financial institutions to offer the most competitive products in this growing market.

The bank offers a complete range of credit and guarantee services for international transactions such as export and import, collection and remittance. From 2012, the bank has built on its extensive experience to bring new products to the market such as Inward & Outward Payment Collection services as well as Letter of Credit services, Usance Payable at Sight LC/SKBDN and Pre-Shipment Financing. This offers a one stop solution for importers and exporters and allows the bank to play a key role in a fast growing area of demand among Indonesia’s expanding local businesses.

Treasury

Within Treasury services, Bank Mutiara has capitalised on Bank Century’s previous strengths in bank note transactions and managed to expand its market share in this area to over 40% of Indonesia’s total market. In addition to this core function, the Treasury division handles security & management, interbank money market transactions, government securities and corporate bond transactions. Through its Treasury products, the bank aims to play a greater role in the deepening of Indonesia’s capital markets and their contribution to the real economy by providing a broad scope of instruments that suit government, corporate and retail clients.

The bank’s improved performance is acutely reflected in its maintaining of net open positions (NOP) for foreign exchange transactions at below the required level by Bank Indonesia of 20%. Forex will continue to play an increasingly larger role in fee based revenue contributions from its retail galleries in Jakarta, Denpasar and those planned in Surabaya and Medan which will all also offer bank note transactions. Through the galleries, customers will soon have access to exclusive foreign exchange transaction services.

Over the course of 2012, the bank is concentrating on boosting transaction volumes and increasing fee based income services from several large corporations. This will focus on Fixed Income Securities such as banknotes in addition to Corporate Bonds and Indonesian Retail bonds.

Information Technology

Since 2010, Bank Mutiara has fully updated and reinforced its IT infrastructure in accordance with Bank Indonesia regulations as well as that of the international financial industry such as Basel II. The year of 2011 has seen the full scale implementation of the new standardised operating processes and information technology system policy which has made a significant impact on improving accuracy and efficiency in customer services.

In line with Bank Indonesia’s requirements and in order to prepare for the further integration of ASEAN nations’ financial systems, Bank Mutiara began the preparations for data warehousing in 2010. A fundamental overhaul of the bank’s internal operational network has also been undertaken with the introduction of the swift–Core, RTGS-Core and Clearing-Core Banking System interfaces.

This focus on ensuring the adoption of the latest technology has also facilitated new product and service innovations. Internet banking for both retail and corporate clients is one such innovation that will be fully operational by 2012 and will offer the most robust online security measures. At the beginning of 2011, the bank also introduced an automated online Credit Analysis Memorandum for SME banking clients that streamlines the credit approval process. Future innovations can be expected in the bank’s growing retail treasury division that will allow for the full range of transaction services to be available at all branches throughout the country.

Risk Management

Effective risk management is one of the core tasks undertaken by the bank’s Supervisory Board which appointed the Risk Supervisory Committee made up of two members as well as one independent commissioner. This body is responsible for the bank’s strict adherence to Basel II requirements and its own risk management policies. It targets eight key areas of potential risk namely credit, market, operational, liquidity, legal, reputation, compliance and strategic risk.

Credit and market risk is of particular importance to the Indonesian market given the high volatility in business areas such as commodities and currency fluctuations. To mitigate this, Bank Mutiara introduced in depth training in loan analysis and non performing loan detection for all account offices alongside independent monitoring of credit risk ratings. In addition, the bank has strengthened its asset and liability pricing policy to monitor market pricing of the bank’s investment portfolio on the long term while bolstering Third Party Funds of long term state funding.

Such measures have directly impacted on the bank’s public image and played a key role in renewing both customer and corporations’ confidence in the bank as a reliable partner that meets the most stringent international risk management regulations.

Bancassurance

Bancassurance has become one of the fastest growing distribution channels for insurance in Indonesia and is playing a significant role in increasing the market penetration. At the end of 2011 Bank Mutiara entered into a number of partnerships with leading insurance companies for bancassurance products with a revenue target of 150 billion RP in 2012. The partner companies include Sun Life Financial Indonesia, Cigna Insurance and Panin Life.

Through this partnership, Bank Mutiara clients have access to the following products:

• Cigna Optima Product Link
  Unit linked products that offer maximum insurance coverage against investment instruments and optimal investment yields.
• Medicash Pro Products
  Health insurance coverage with a 100% payback guarantee on the expiration of the product.
• Panin New Multilink Protection Products
  Unit-linked insurance products for customers looking for long term financial planning.
• Sun Products MaxiLink
  A single premium life insurance product where the value of unit linked investment is locked at the highest optimal price through an innovative investment concept called ‘Top Watermark’.
• Sun Fortune Products Link
  Unit-linked life insurance products with regular premium payments are combined with investments from a choice of investment funds that can be tailored to each customer's risk appetite.