Indonesia Economic and Market Outlook 2016 - ekon · PDF fileIndonesia Economic and Market...
Transcript of Indonesia Economic and Market Outlook 2016 - ekon · PDF fileIndonesia Economic and Market...
© PT Bank Mandiri (Persero) Tbk.
Indonesia Economic and Market Outlook 2016
Anton H. Gunawan ~ Chief Economist of PT Bank Mandiri (Persero), Tbk.
Mobile: +62 (817) 988-8884 |E-mail: [email protected]
1
Jakarta, CMEA: July 25th, 2016
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Where will the global economy heading?
• The global economic recovery is still fragile; volatility remains • Brexit putting more pressures, amid China continues to decelerate • Any rebound on commodity prices?
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Area 2015 2016F 2017F
World 3.1 3.2 3.5
US 2.4 2.6 2.6
Euro Area 1.6 1.5 1.6
UK 2.2 1.9 2.2
Japan 0.5 0.5 -0.1
China 6.9 6.5 6.2
India 7.3 7.5 7.5
Russia -3.7 -1.8 0.8
Brazil -3.8 -3.8 0
ASEAN-5 4.7 4.8 5.1
The global economic recovery is still fragile, both IMF and World Bank cut their global growth projection again in 2016 driver is still unseen yet
Source : IMF, World Economic Outlook April 2016, World Bank, Global Economic Prospects June 2016
Area 2015 2016F 2017F
World 2.4 2.4 2.8
US 2.4 1.9 2.2
Euro Area 1.6 1.6 1.6
Japan 0.6 0.5 0.5
China 6.9 6.7 6.5
India 7.6 7.6 7.7
Russia -3.7 -1.2 1.4
Brazil -3.8 -4.0 -0.2
Indonesia 4.8 5.1 5.3
East Asia and Pacific 4.7 4.8 5.1
IMF cut 2016 global growth forecast to 3.2% from 3.4%
World bank cut 2016 global growth forecast to 2.4% from 2.9%
3
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Source: Bloomberg, World Bank (as of 11 July 2016, %YTD) * Rotterdam Price
2014: -24%
2015: -34%
2014: -18%
2015: -29%
2014: -20%
2015: -13% 2014: -38%
2015: -26%
2014: -27%
2015: -39%
Brent Crude Oil
USD 46.6/bbl
WTI Crude Oil
USD 45/bbl
Coal
USD 56.4/MT
CPO
USD 625/MT* Rubber
USD 1.6/Kg
2016: +7% 2016: +10% 2016 : +19%
2016: +33%
2016: -2%
Commodity Price Forecast 2016 2017 2018 2019 2020
Oil : Nymex WTI Crude Oil (USD/BBL) 47.75 50.45 53.03 54.64 55.87
Oil : ICE Brent Crude Oil (USD/BBL) 48.74 51.62 54.87 57.28 59.32
CPO (USD/MT)* 630 647 664 682 701
Coal CIF (USD/MT) 58.41 56.60 56.29 56.50 56.60
Rubber (USD/kg) 1.35 1.43 1.52 1.61 1.71
Limited improvements of Global Commodity Prices as no other countries can replace China’s demand
4
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28,8%
12,0% 13,5%
14,9%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
35,0%
UK China India US
Exports to EU
Trade to EU and UK From Big Country Big countries will be affected with EU and UK’s economies slowdown
Source: Trademap
3,4%
2,6%
3,7%
1,7%
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
3,5%
4,0%
India China US Japan
Exports to UK
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Sources of Gains & Losses from Brexit (for UK)
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Will Indonesian economy keep growing?
• The consumption is still relatively flat interest rate will decrease • Economy is expected to somewhat rebound in 2H16 seasonality factors • Main risks: tax shortfall, thus widening deficit; and policy mishaps • Need more focus industrial policy direction
© PT Bank Mandiri (Persero) Tbk.
Sumber: BPS
Indonesia may also experience a stagnant economic growth in 2016, with sub 5.0% growth lack of a driver
© PT Bank Mandiri (Persero) Tbk.
9
Aceh 3.66
Sumut 5.02
Riau 2.34
Kepri 4.58
Sumbar 5.48
Jambi 3.42
Bengkulu 4.99
Sumsel 4.94
Babel 3.3
Lampung 5.05 DKI
5.62
Banten 5.15
Jabar 5.08
Jateng 5.12
DIY
5.04
Jatim 5.34
Bali 6.04
NTB 9.97
NTT 5.06
Kalbar 5.93
Kalteng 5.17
Kaltim -1.29
Kalsel 3.97
Sulut 5.96 Gorontalo
6.61
Sulteng 11.81
Sulbar 6.14
Sulsel 7.41
Sultra 5.21
Malut 5.09
Maluku 5.46
Pabar 5.52
Papua -2.03
> 7
5.5 - 7
4 - 5.49
<4
More provinces have lower than national economic growth in 1Q16
Regional Economic Growth 1Q-2016 (%)
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4,0%
4,5%
5,0%
5,5%
6,0%
6,5%
-20%
-10%
0%
10%
20%
30%
40%
Ma
r-12
Ju
n-1
2
Sep
-12
Dec-1
2
Ma
r-13
Ju
n-1
3
Sep
-13
Dec-1
3
Ma
r-14
Ju
n-1
4
Sep
-14
Dec-1
4
Ma
r-15
Ju
n-1
5
Sep
-15
Dec-1
5
Ma
r-16
VAT growth y-y (LHS) GDP growth y-y (RHS)
GDP growth and value added tax growth
Signs of relatively stagnant economic growth domestically
May16 growth of VAT still in the negative territory, despite some improvement in government spending realization → sign of improvement in 2Q16? Spending cut is imminent this year.
213
273
317
375 330
357
2011 2012 2013 2014 2015 2016
Government spending realization (IDR tn)
5M accumulation of government spending
5M accumulation of material and capital expenditure
37,9
53,4 58,0 59,9
52,7
91,7
2011 2012 2013 2014 2015 2016
Source : CEIC, Ministry of Finance
© PT Bank Mandiri (Persero) Tbk.
-15
-10
-5
0
5
10
15
Jan-1
5F
eb
-15
Ma
r-1
5A
pr-
15
Me
i-15
Jun-1
5Jul-1
5A
gu-1
5S
ep-1
5O
kt-
15
No
v-1
5D
es-1
5Jan-1
6F
eb
-16
Ma
r-1
6A
pr-
16
Me
i-16
Jun-1
6
National JakartaJava ex. Jakarta Ex. Java
-5
0
5
10
15
20
25
30
1Q
13
2Q
13
3Q
13
4Q
13
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
2Q
15
3Q
15
4Q
15
1Q
16
National JakartaJava ex. Jakarta Ex. Java
-50
0
50
100
150
Jan-1
5F
eb
-15
Ma
r-1
5A
pr-
15
Me
i-15
Jun-1
5Jul-1
5A
gu-1
5S
ep-1
5O
kt-
15
No
v-1
5D
es-1
5Jan-1
6F
eb
-16
Ma
r-1
6A
pr-
16
Me
i-16
Jun-1
6National Greater JakartaRest of Java Ex. Java
Cement sales growth (% YoY) Vehicle and motorcycle sales
growth (% YoY) Retail sales index
Ramayana SSSG (% MoM)
SSSG : same store sales growth
Aces Hardware SSSG (% MoM) Matahari Dept. Store SSSG (% YoY)
Source : Companies, CEIC as of July 2016
Mixed performances in some benchmark indicators. Seasonal pick up?
Greater Jakarta : +122.9
National : +99.8 Jakarta : +13.0
National: +10.9 National: +9.4
16,9 6,3 5,5
4,2
Ju
n-1
4
Sep
-14
De
c-1
4
Ma
r-15
Ju
n-1
5
Sep
-15
De
c-1
5
Ma
r-16
Ju
n-1
6
11,5
-8,9 -1,7
Ju
n-1
4
Au
g-1
4
Oct-
14
De
c-1
4
Feb
-15
Ap
r-1
5
Ju
n-1
5
Au
g-1
5
Oct-
15
De
c-1
5
Feb
-16
Ap
r-1
6
Ju
n-1
6
Vehicle sales Motorcycle sales
177,50
190,10
213,40
Ju
n-1
4
Au
g-1
4
Oct-
14
De
c-1
4
Feb
-15
Ap
r-1
5
Ju
n-1
5
Au
g-1
5
Oct-
15
De
c-1
5
Feb
-16
Ap
r-1
6
Ju
n-1
6
© PT Bank Mandiri (Persero) Tbk.
Sector Current Market
Demand Assessment c)
Indicator Growth (%, yoy)
Notes Jan-May 2015
2015 Jan-May
2016
Retail Positive Ramayana sales -1.0 b) -2.0 27.0 b)
Consumer confidence is flat Ace Hardware sales 2.7 b) 4.7 6.4 b)
Automotive Neutral
Total car sales -16.6 -16.1 -0.6
Consumer confidence is flat Commercial vehicle -14.0 -16.6 -29.1
Passenger vehicle -17.5 -16.0 9.9
Total motorcycle sales -24.7 -17.6 -6.0
Property Negative Total Marketing Sales of eight companies
24.4 b) -4.3 -39.8 b) Consumer confidence is flat and interest rates are still high
Cement Positive Total sales -2.8 b) 0.9 3.7 b) Sales growth is supported by
government infrastructure projects
Heavy Equipment
Negative
Total sales -38.3 -39.5 -26.0 Demand from commodity sector has not yet fully recovered even
though commodity prices increased
Forestry segment -15.5 -9.3 -51.8
Agro segment -56.9 -63.2 -45.2
Mining segment -43.2 -49.9 -52.0
Construction segment -31.0 -22.3 26.1
Sea Transport Negative Loading and unloading activities in the 5 main ports
-7.9 -8.2 -10.5 Volume of trade has not yet
increased, especially in
commodities sector
Oil Negative CAPEX (Investments) n.a. -2.6 -14.9 d) Oil price is still low
CPO Negative Volume of exports 27.7 a) 15.6 -8.0 a) CPO price has consistently increased but still needs time to impact the export performance Value of exports -0.6 a) -11.9 -18.3 a)
Coal Negative Volume of exports -3.4 -7.8 -10.6 Coal price remains low
Value of exports -15.9 -21.2 -28.2 Notes : a) January-April b) January-June c) the status is not OCE Industry Rating; d) 2016 plan (full year); n.a. data not available
Industrial sales performance in 5M16: many still in the red territory
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2012 2013 2014 2015 May-162012 2013 2014 2015 May-16
2012 2013 2014 2015 May-162012 2013 2014 2015 May-16
Sector (% of total loans)
Wholesale (19.6%)
Processing ( 18.2%)
% (YoY)
Agricultures ( 6.4%)
Transportation (4.3%)
Real Estate ( 4.6%)
Most sectors with large proportion of total loans have been slowing down significantly since 2012
Source : Indonesian banking statistic, as of May 2016
33.2
28.9
10.6 11.3
29.4 29.6
15.1 14.3
29.7
24.4
20.0 19.9 24.8
29.6 28.3
11.7
-14.3
20.4
7.4 8.2
33.7
3.3 5.1
-0.7
12.5
2012 2013 2014 2015 May-16
13
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Deteriorating banking sector’s asset quality: NPL rose in May 2016 to 3.11% from 2.93% (Apr16). Rising special mention loans due to restructuring and weak economy
14
NPL (%) Credit quality (IDR tn)
Source : Indonesian banking statistics, May 2016
NPL by types and earnings
asset by categories(IDR tn)
Earnings Asset Dec-14 Dec-15 May-16
Current 4,309 4,720 4,931
Special mention 143 184 216
Sub standard 13 18 23
Doubtful 14 13 17
Loss 52 68 82
Types of Credit Dec-14 Dec-15 May-16
Working Capital 43.8 57.3 72.6
Investment 21.2 27.0 33.7
Consumption 14.3 16.6 20.1
2.37
2.49
2.872.83
2.93
3.11
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
100
150
200
250
300
350
400
Feb
-15
Ma
r-15
Ap
r-1
5
Me
i-15
Ju
n-1
5
Ju
l-1
5
Ag
u-1
5
Sep
-15
Okt-
15
No
v-1
5
De
s-1
5
Ja
n-1
6
Feb
-16
Ma
r-16
Ap
r-1
6
Me
i-16
Special mention Sub-standard
Doubtful Loss
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-20%
-10%
0%
10%
20%
30%
40%
-1,00% 0,00% 1,00% 2,00% 3,00% 4,00% 5,00% 6,00%
With a largest size of loan and relatively higher percentage of NPL, wholesale
and retail trade and manufacturing sector has larger risk to the whole banking
system
Mining, NPL 5.6%,
loan growth -13.0,
size IDR118 tn
Procesing Industry,
NPL 3.6%, loan growth
8.2%, size IDR740 tn
Construction,
NPL 4.8%, loan
growth 15%, size
IDR175 tn
Real estate, NPL 2.9%, loan
growth 12.5%, size IDR186tn
Education NPL
1.7%, loan
growth 15.7%,
size IDR8,312 tn
Bubble size :
nominal size of
credit
Source : Indonesian Banking Statistics, Bank Mandiri calculation as of May 2016
NPL
Agriculture, NPL 2%, loan
growth 20%, size IDR261
tn
21%
2%
0%
1%
Growth of NPL (% YoY)
1%
Size of loan, loan growth, and NPL by sector
27%
6%
1%
1%
7%
4%
2%
0%
Proportion to total NPL
5%
4%
Community,
NPL 4.65%, loan
growth -7.5%,
size IDR55 tn
8,2%
13,9%
13,9%
14,1%
17,6%
18,3%
22,0%
23,3%
24,2%
27,4%
34,1%
44,1%
46,7%
49,5%
75,2%
76,0%
Community,…
For Apartement…
Real Estate,…
Non Industrial Origin…
Agricultures, Hunting…
For Home Ownership
For Vehicles Ownership
Financial intermediaries
Transportation,…
Wholesale and Retail…
For Shop House…
Electricity, Gas and…
Mining and Quarrying
Education Services
Provision of…
Procesing Industry
2%
Electricity, Gas
and Water NPL
1.7%, loan growth
15& size IDR101tn
Wholesale, NPL
4.4%, loan growth
7.4%, size IDR796
tn
Transportation,
NPL 4.5%, loan
growth -0.7%, size
IDR1756tn
15
© PT Bank Mandiri (Persero) Tbk.
0%
1%
2%
3%
4%
5%
6%
0% 20% 40% 60% 80% 100%
0%
1%
2%
3%
4%
5%
6%
0% 20% 40% 60% 80% 100%
Fisheries
NPL by sector in May 2015
NPL growth
Provision of eating and
drinking
Financial
Real
estate
Electricity
Construction
Fisheries
Processing
Transportation
Wholesale
Mining
Agriculture Industry :
2.5%
Industry : 30.7%
NPL by sector in May 2016
NPL growth
Construction
Industry :
3.1%
Industry : 30.4%
Real Estate
Agriculture
Transportation
Financial
Electricity
Mining
Provision of
eating and
drinking
Procesing
Industy
Wholesale
It has more spread out, not just commodity related sector only
Source : Indonesian Banking Statistics, Bank Mandiri calculation as of May 2016
© PT Bank Mandiri (Persero) Tbk.
Production capacity utilization (%) Corporate capital expenditures*
Source : CEIC, Mandiri Sekuritas
Production capacity utilization and corporate capital expenditures are also still relatively weak
79,8
77,8
75,8
66
68
70
72
74
76
78
80
82
Ma
r-1
1
Jun-1
1
Sep-1
1
De
c-1
1
Ma
r-1
2
Jun-1
2
Sep-1
2
De
c-1
2
Ma
r-1
3
Jun-1
3
Sep-1
3
De
c-1
3
Ma
r-1
4
Jun-1
4
Sep-1
4
De
c-1
4
Ma
r-1
5
Jun-1
5
Sep-1
5
De
c-1
5
Ma
r-1
6
50,86
23,57
-11.5% -4.8%
-30%
-10%
10%
30%
50%
70%
90%
-
10
20
30
40
50
60
Mar
-11
Jun
-11
Sep
-11
De
c-1
1
Mar
-12
Jun
-12
Sep
-12
De
c-1
2
Mar
-13
Jun
-13
Sep
-13
Dec
-13
Mar
-14
Jun
-14
Sep
-14
De
c-1
4
Mar
-15
Jun
-15
Sep
-15
De
c-1
5
Mar
-16
Capex (IDR tn) - LHS Capex growth y-y -RHS
* Consists of 78 companies that covered by Mandiri Sekuritas Equity Research
© PT Bank Mandiri (Persero) Tbk. 18
Aceh
2,05 jt; 8,13%
Sumut
6,17jt; 6,49%
Riau
2,84jt; 5,94%
Kepri
0,83jt; 9,03%
Sumbar
2,43jt; 5,41%
Jambi
1,62jt, 4,66%
Bengkulu
0,96jt; 3,84%
Sumsel
3,89jt; 3,94%
Babel
0,65jt; 6,17%
Lampung
3,85jt; 4,54%
DKI
5jt; 5,77%
Banten
5,23jt; 7,95% Jabar
20,28jt; 8,57%
Jateng
17,16jt; 4,2%
DIY
2,04jt; 2,81%
Jatim
19,65jt; 4,14%
Bali
2,33jt; 2,12%
NTB
2,3jt; 3,66% NTT
2,36jt; 3,59%
Kalbar
2,31jt; 4,58%
Kalteng
1,24jt; 3,67%
Kaltim
1,5jt; 8,86%
Kalsel
1,98jt; 3,63%
Sulut
1,09jt; 7,82% Gorontalo
0,54jt; 3,88%
Sulteng
1,44jt; 3,46%
Sulbar
0,62jt; 2,72%
Sulsel
3,58jt; 5,11%
Sultra
1,17jt; 3,78%
Malut
0,51jt;
3,43%
Maluku
0,68jt; 6,98%
Pabar
0,41jt; 5,73%
Papua
1,69jt; 2,97%
Peta Kontribusi Industri Manufaktur, JumlahTenaga Kerja
dan Tingkat Pengangguran Terbuka (2015)
Formulating industrial policy (1) Map of manufacturing and
employment
Sumber: BPS,
Keterangan:
(i) Share industri manufaktur per provinsi
> 20% (9 provinsi)
>10% – ≤ 20% (13 provinsi)
≤10 (12 provinsi)
(ii) Angka di tiap provinsi menunjukkan jumlah
tenaga kerja (juta) dan tingkat pengangguran
terbuka (%),
© PT Bank Mandiri (Persero) Tbk. 19
33,4 29,9
3,51
Tenaga ListrikYang
Dibangkitkan
Listrik yangDidistribusikan
Defisit/ Surplus
Sumatera
173.37 145.54
27.84
Tenaga ListrikYang
Dibangkitkan
Listrik yangDidistribusikan
Defisit/ Surplus
Jawa
4,89 6,24
-1,35 Tenaga Listrik
YangDibangkitkan
Listrik yangDidistribusikan
Defisit/ Surplus
Balnusra
2,26 2,04
0,22
Tenaga ListrikYang
Dibangkitkan
Listrik yangDidistribusikan
Defisit/ Surplus
Maluku Papua
7,67 7,83
-0,15
Tenaga ListrikYang
Dibangkitkan
Listrik yangDidistribusikan
Defisit/ Surplus
Sulawesi 10,22
8,35
1,88 Tenaga Listrik
YangDibangkitkan
Listrik yangDidistribusikan
Defisit/ Surplus
Kalimantan
Peta Nilai Proyek Infrastruktur per Provinsi Sampai Dengan Tahun 2016 (Rp. Trilyun)
dan Produksi Listrik per Pulau (Ribu MWH)
Sumber: BCI 2016, BPS dan PLN.
>20 triliun (1 provinsi)
10 − ≤20 triliun (4 provinsi)
1 − 10 triliun (15 provinsi)
≤ 1 triliun (14 provinsi)
Keterangan:
Nilai Proyek Infrastruktur 2016
Formulating industrial policy (2) Map of manufacturing and
infrastructures / electricity
© PT Bank Mandiri (Persero) Tbk.
2010
2011
2012
2013 2014
2015
Jan – May 2016 : IDR
403 tn (-7% compared
to Jan – Apr 2015)
Tax rev accumulation (Rp trillion) Excise (Rp trillion)
2010
2011
2012
2014
2015
2013
Jan – May 2016 : IDR
28 tn (-36% compared
to Jan – Apr 2015)
Monthly government tax revenue realization 2010 - 2016
Nov - Dec 2015 : +IDR248
tn Nov - Dec 2014 : +IDR147
tn
Nov - Dec 2015 : +IDR38 tn
Nov - Dec 2014 : +IDR17 tn
Source : ministry of finance, CEIC
0
200
400
600
800
1000
1200
1400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0
20
40
60
80
100
120
140
160
Jan Feb Mar Apr MayJun Jul AugSep Oct NovDec
“Ijon” and tax on asset revaluation saved the cash flow problems in late 2015
© PT Bank Mandiri (Persero) Tbk.
2015 2016
2015 20162015 2016
Rp1240 tn
Without
“ijon”:
Rp1,170 tn
Estimated
“ijon”: Rp70
tn
Rp 1,546 tn Tax revenue
target 2016
Scenario I : tax revenue growth 7%
Tax revenue
growth 7%
= Rp1,252 tn
Shortfall :
Rp294 tn
Scenario II : tax revenue growth 5%
Rp1240 tn
Without
“ijon”:
Rp1,170 tn
Estimated
“ijon”: Rp70
tn
Rp 1,546 tn Tax revenue
target 2016
Tax
revenue
growth 5%
= Rp1,228
tn
Shortfall :
Rp318 tn
= Rp1000 tn = Rp1000 tn
7% growth of tax revenue = Rp1,252 tn
Shortfall Rp294 tn from Rp1,546 tn
target
5% growth of tax revenue = Rp1,228 tn
Shortfall Rp318 tn from Rp1,546 tn
target
Source : ministry of finance, Bank Mandiri’s calculation
Fiscal risks due to shortfall in tax revenue more spending cuts needed
Tax
revenue
2015
Tax revenue
2015
Scenario III : tax revenue growth 0%
0% growth of tax revenue = Rp1,170 tn
Shortfall Rp376 tn from Rp1,546 tn
target
Rp1240tn
Estimated
“ijon”: Rp70
tn
Rp 1,546 tn Tax
revenue
target
2016
Tax
revenue
growth 0%
=
Rp1170tn
Shortfall :
Rp376 tn
= Rp1000 tn
Tax revenue
2015
© PT Bank Mandiri (Persero) Tbk.
Different estimates of Tax Amnesty’s revenues, but still we think they are not enough to fill in the budget gap
Estimation on Tax Amnesty Implementation
Item Bank Indonesia Government Mandiri Sekuritas
Potential offshore assets (Rp tn) 3,147 11,400 3,850
Potential onshore assets (Rp tn) 2,400
Estimated Declared offshore assets (Rp tn) 1,888 3,500 - 4,000 2,117
Estimated Declared onshore assets (Rp tn) 1,440
Potential repatriation asset (Rp tn) 560 1000 200 - 300
Tax revenue generation (Rp tn) 53 165 80 - 90
Impact exchange rate appreciation (Rp/USD) 150
Impact to economic growth (ppt) 0.3
Explanation on tax revenue creation from tax amnesty
Bank Indonesia: Only 60% of the offshore assets will declare under the tax amnesty law as the other 40% are related to crime activities
Government : Rp3500tn - Rp4000tn offshore declared assets that is not repatriated * 4% and Rp1000 offshore declared assets that are repatriated *2%
22
© PT Bank Mandiri (Persero) Tbk.
23 Source: CEIC
Indonesia’s real interest rate will likely remain competitive at 2%
Year end inflation is expected to pick up at manageable pace while average inflation is expected to go down
We expect BI to cut its benchmark rate further amid lower inflation and relatively more stable Rupiah. But, policy flip flop have reduced BI’s credibility
0
4
8
12
16
20
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Inflation (%)
eop (%)
average (%)
1.12.4
-4
0
4
8
12
16
20
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
BI rate and Inflation Real interest rate (%) Average inflation (%)Average BI rate
© PT Bank Mandiri (Persero) Tbk.
24
Loan to Deposit Ratio (%) Open market operation Instruments Outstanding
(IDR tn)
209
Outstanding banking liquidity = Open market operation instrument –
Swap BI
The industry LDR was relatively stable at relatively high level of 90.3% Placement at BI’s instrument had decreased since March, esp. at deposit facility
88,4
88,7
89,4
88,5
88,3
87,6
87,9
88,7
88,5
88,5
88,8
88,5
89,7
90,5
92,1
91,0
89,5
89,6
89,5
90,3
Oct-
14
No
v-1
4
De
c-1
4
Jan-1
5
Feb
-15
Ma
r-1
5
Apr-
15
Ma
y-1
5
Jun-1
5
Jul-1
5
Aug-1
5
Sep-1
5
Oct-
15
No
v-1
5
De
c-1
5
Jan-1
6
Feb
-16
Ma
r-1
6
Apr-
16
Ma
y-1
6
(200)
(100)
-
100
200
300
400
500
600
Dec
-12
Jan
-13
Feb
-13
Mar
-13
Ap
r-13
May
-13
Jun
-13
Jul-1
3A
ug-
13Se
p-1
3O
ct-1
3N
ov-
13D
ec-1
3Ja
n-1
4Fe
b-1
4M
ar-1
4A
pr-
14M
ay-1
4Ju
n-1
4Ju
l-14
Au
g-14
Sep
-14
Oct
-14
No
v-14
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-15
May
-15
Jun
-15
Jul-1
5A
ug-
15Se
p-1
5O
ct-1
5N
ov-
15D
ec-1
5Ja
n-1
6Fe
b-1
6M
ar-1
6A
pr-
16M
ay-1
6Ju
n-1
6
Deposit Facility Term Deposit
Swap BI Reverse Repo SBN
SBI 9M+SDBI Outstanding Banking Liquidity
Source : BI and OJK, CEIC
© PT Bank Mandiri (Persero) Tbk.
But liquidity ratio fell as the banks’ holding on liquid instrument decreased in April
Liquidity ratio (Liquid
instrument/NCD)
Updated : May 2016
Liquidity ratio (Liquid
instrument/third party fund)
Liquid instrument = cash + placement at BI+ Excess Liquidity
NCD = Non core deposit = 30% demand deposit + 30% saving deposit +
10% time deposit
Source : Indonesian Banking Statistics, Bank Mandiri calculation
75
,48
8
6,0
4
85
,40
8
7,7
0
98
,89
8
8,2
6 9
4,8
6
99
,04
9
3,5
9
93
,34
9
2,4
7
92
,76
9
9,6
8
94
,55
8
9,9
5 9
5,4
3
94
,92
9
0,1
6 94
,71
8
7,0
2 9
2,5
0
10
1,2
7
87
,46
91
,77
8
1,7
9
71
,59
7
5,5
0
50
60
70
80
90
100
110
Mar
-14
Ap
r-1
4M
ay-1
4Ju
n-1
4Ju
l-1
4A
ug-
14
Sep
-14
Oct
-14
No
v-1
4D
ec-1
4Ja
n-1
5Fe
b-1
5M
ar-1
5A
pr-
15
May
-15
Jun
-15
Jul-
15
Au
g-1
5Se
p-1
5O
ct-1
5N
ov-
15
Dec
-15
Jan
-16
Feb
-16
Mar
-16
Ap
r-1
6M
ay-1
6
15
,7
18
,0
17
,8
18
,3
20
,4
18
,1
19
,6 20
,4
19
,3
19
,2
18
,8
18
,8
20
,2
19
,1
18
,2
19
,6
19
,4
18
,4 1
9,6
1
7,9
1
9,1
2
1,1
1
8,1
18
,9
16
,8
14
,8 1
5,6
10
12
14
16
18
20
22
Mar
-14
May
-14
Jul-
14
Sep
-14
No
v-1
4
Jan
-15
Mar
-15
May
-15
Jul-
15
Sep
-15
No
v-1
5
Jan
-16
Mar
-16
May
-16
© PT Bank Mandiri (Persero) Tbk. 26
4,3
1,1
1,2
2,5
4,0
2,3
2,2
0,6
2,1
2,2
3,2
2,3
1,2
3,4
3,9
2,8
1,5
1,0
1,9
3,1
BTN
Bank Pan
BankPermata
BII
CIMB Niaga
Danamon
BRI
BCA
BNI
Bank Mandiri
Mar-16Mar-15
109,7
98,8
89,8
103,1
97,3
119,1
83,0
77,9
89,1
86,8
109,0
99,7
92,6
98,3
99,0
114,9
89,8
81,7
90,3
89,8
BTN
Bank Pan
BankPermata
BII
CIMB Niaga
Danamon
BRI
BCA
BNI
BankMandiri
NPL (%) LDR (%)
Source : Bloomberg
Asset quality and liquidity of top 10 banks
© PT Bank Mandiri (Persero) Tbk.
4,5
5,0
5,5
6,0
6,5
Jan-16 Feb-16 Mar-16 Apr-16 May-16
1M 3M
5,0
5,5
6,0
6,5
7,0
7,5
8,0
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
1M 3M
5,0
5,5
6,0
6,5
7,0
7,5
8,0
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
1M 3M5,0
5,5
6,0
6,5
7,0
7,5
8,0
Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16
1M 3M
27
-100
bps
-50 bps
7.75
6.75
6.375
5.875
-50 bps
-100
bps
7.75
7.25
6.87
5
5.87
5
-62.5 bps
7.50
6.875 6.50
5.87
5
-62.5 bps
-137.5 bps -112.5 bps
Banks had lowered deposit rates following cuts in BI rate this year
© PT Bank Mandiri (Persero) Tbk.
Deposit rates : Banks lowered their deposit rates in
May. 1M lowered by 9.8bps, 3M lowered by 23.6 bps
and 6M lowered by 17.1 bps
Lending rates : Rates for working capital loans in May
lowered by 16.9 bps, investment loans rates lowered by
12.0 bps, and rates for consumption loans lowered by
4.4 bps
Declines in time deposit rates were lagging vis a vis lending rates
Source : Indonesian Banking Statistics, as of May 2016
3
4
5
6
7
8
9
10
Jan
-11
Ma
y-1
1
Se
p-1
1
Jan
-12
Ma
y-1
2
Se
p-1
2
Jan
-13
Ma
y-1
3
Se
p-1
3
Jan
-14
Ma
y-1
4
Se
p-1
4
Jan
-15
Ma
y-1
5
Se
p-1
5
Jan
-16
Ma
y-1
6
Deposit Rates : 1 M
Deposit Rates : 3 M
Deposit Rates : 6 M
6.88
8.02
7.34
10.0
10.5
11.0
11.5
12.0
12.5
13.0
13.5
14.0
14.5
15.0
Jan
-12
May
-12
Sep
-12
Jan
-13
May
-13
Sep
-13
Jan
-14
May
-14
Sep
-14
Jan
-15
May
-15
Sep
-15
Jan
-16
May
-16
Consumption
Investment
Working Capital
11.98
13.86
11.60
28
© PT Bank Mandiri (Persero) Tbk.
Some EM’s financial markets improved in 2016 amid reduced global uncertainty
Sumber: Bloomberg
Stock Indices Growth (ytd) Government Bond Yield (bps change)
Updated 16 Juni 2016
-17.6%
-9.5%
-3.9%
1.1%
2.1%
2.1%
4.4%
7.8%
6.5%
10.6%
11.8%
-19.3%
-16.1%
-3.9%
0.6%
1.1%
1.4%
4.4%
7.1%
8.0%
10.9%
12.2%
China
Japan
Malaysia
Korsel
India
US
Indonesia
Russia
Filipina
Singapore
Brazil
Jun 16 YTD
May 16 YTD
-28.9
-23.6
-39.0
-19.9
-39.8
-42.4
-75.0
-87.1
-352.5
-24.2
-28.6
-44.0
-46.5
-60.4
-65.8
-90.0
-108.5
-376.5
India
Malaysia
Japan
Thailand
South Africa
US
Russia
Indonesia
Brazil
Jun 16 YTD
May 16 YTD
© PT Bank Mandiri (Persero) Tbk.
-2.9%
-3.2%
-1.7%
-0.9%
-1.3%
-2.5%
-0.6%
0.9%
0.9%
2.4%
10.3%
6.7%8.8%
-4.6%
-4.6%
-3.4%
-3.3%
-2.3%
-1.7%
-1.1%
0.0%
0.8%
1.5%
6.3%
10.2%
10.3%
China
India
Hong Kong
USD
Philippines
Australia
Thailand
Euro
Singapore
Malaysia
Russia
Japan
Brazil
Jun 16 YTD
May 16 YTD
1.4%
1.7%
0.9%
1.2%
-0.3%
-1.0%
-0.9%
-2.4%
-3.9%
-10.7%
-7.7%
-10.0%
1.5%
1.4%
0.1%
-0.4%
-1.1%
-2.3%
-3.3%
-4.3%
-4.7%
-11.4%
-12.2%
-12.3%
China
India
Turki
Korea
Philippines
Thailand
Indonesia
Singapore
Malaysia
Rusia
Japan
Brazil
Jun 16 YTD
May 16 YTD
More stable Rupiah as authorities getting more serious in addressing the economic slowdown problems
Sumber: Bloomberg
Currencies against USD(% ytd)
depreciate appreciate
Updated 16 Juni 2016
depreciate appreciate
IDR against others (% ytd)
© PT Bank Mandiri (Persero) Tbk. Source: BIS, last updated in July 2016
appreciate
depreciate
REER, 2010 = 100
125.0
76.077.0
90.0
103.0
82.2
106.7
82.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
130.0
140.0
Jan-
10
Apr
-10
Jul-
10
Oct
-10
Jan-
11
Apr
-11
Jul-
11
Oct
-11
Jan-
12
Apr
-12
Jul-
12
Oct
-12
Jan-
13
Apr
-13
Jul-
13
Oct
-13
Jan-
14
Apr
-14
Jul-
14
Oct
-14
Jan-
15
Apr
-15
Jul-
15
Oct
-15
Jan-
16
Apr
-16
China Russia Brazil
Indonesia ASEAN-5 excl. Indonesia Turkey
Korea Fragile 5 excl. Indonesia
The Rupiah is still undervalued (based on REER calculation), but BI is reluctant to let the Rupiah stronger while accumulating reserves
31
© PT Bank Mandiri (Persero) Tbk.
Returns on Indonesia Bonds are still the highest YTD 2016 (as of 18-Jul) FY2015
Source: Bloomberg and Mandiri Sekuritas, as of 18-July-2016
-3,3%
-1,6%
2,7%
3,3%
3,0%
0,4%
7,4%
5,6%
4,3%
2,4%
7,5%
3,3%
5,8%
6,7%
10,9%
5,2%
15,7%
-5,0% 0,0% 5,0% 10,0% 15,0% 20,0% 25,0%
BBG ASIA Local Sov
BBG China Local Sov
BBG India Local Sov
BBG Taiwan Local Sov
BBG S Korea Local Sov
BBG Thailand Local Sov
BBG Philippine Local Sov
BBG Malaysia Local Sov
BBG Indonesia Local Sov
FX gained/(loss) againstUSD
Total return LCGB
-4,6%
-4,9%
-3,8%
-7,7%
-9,5%
-4,9%
-22,8%
-11,4%
0,9%
8,1%
8,1%
6,8%
6,2%
5,9%
0,9%
4,2%
2,9%
-30,0% -20,0% -10,0% 0,0% 10,0%
BBG ASIA Local Sov
BBG China Local Sov
BBG India Local Sov
BBG Taiwan Local Sov
BBG S Korea Local Sov
BBG Thailand Local Sov
BBG Philippine Local Sov
BBG Malaysia Local Sov
BBG Indonesia Local Sov
FX gained/(loss) againstUSD
Total return LCGB
32
© PT Mandiri Sekuritas
Still Positive expected total returns in Indonesia bond market
Different times, different drivers
Long term average return investing in IDR LCY GB is 12% with standard deviation of 12%.
We expect this year total return will +16%
(0,6)
29,5
10,1
3,2
22,4 21,1 21,5
13,1
(13,2)
13,6
3,2
(30)
(20)
(10)
-
10
20
30
40
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Coupon Capital gain/(loss)
Total return
Variable
Significance Weight
Before
investment
grade
After
investmen
t grade
US 10Y (%) 5.6% 43.2%
BI Rate (%) 18.2% 39.0%
CDS-5yr (%) 25.0% 9.9%
Core Inflation
(%yoy) 36.5% 4.2%
Change IDR/USD
(%yoy) 14.7% 3.8%
33
© PT Bank Mandiri (Persero) Tbk.
Update on IDR bond fund flow data (Rp tn) Foreign flows still supporting the recent rally
Source: DMO, Bloomberg and Mandiri Sekuritas
31-Dec-15
% of
outstanding 12-Jul-16 % of outstanding
Net buy/(sell) - Rp tn
mtd ytd 2015
Bank 348.9 23.9% 355.7 23.5% (6.9) 6.8 63.1
Central Bank 150.1 10.3% 148.1 7.2% (1.0) (2.0) 18.7
Mutual Fund 61.60 4.2% 76.6 4.7% 0.2 15.0 15.8
Insurance 171.62 11.7% 213.8 13.0% (0.6) 42.2 21.0
Foreign 558.52 38.2% 650.4 39.6% 6.4 91.9 97.2
Pension Fund 49.83 3.4% 64.38 3.9% (0.3) 14.6 6.5
Individual 42.53 2.9% 48.9 3.0% 0.0 6.4 12.1
Others 78.50 5.37% 85.5 5.2% (1.3) 7.0 17.2
Total 1,461.85 100.0% 1,643.4 100.0% (3.4) 181.5 251.9
34
© PT Bank Mandiri (Persero) Tbk. Source: Bloomberg, as of 12 July 2016
(%)
5-yr US Govt. Bond Yield vs. 5-yr ID USD Govt. Bond Yield
0.00
1.00
2.00
3.00
4.00
5.00
6.00
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oct-1
0
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
Oct-1
1
Ja
n-1
2
Ap
r-1
2
Ju
l-1
2
Oct-1
2
Ja
n-1
3
Ap
r-1
3
Ju
l-1
3
Oct-1
3
Ja
n-1
4
Ap
r-1
4
Ju
l-1
4
Oct-1
4
Ja
n-1
5
Ap
r-1
5
Ju
l-1
5
Oct-1
5
Ja
n-1
6
Ap
r-1
6
Ju
l-1
6
US Govt. Bond Yield 5-yr ID USD Govt. Bond Yield 5-yr
spread 5-yr US vs. 5-yr ID USD Govt. Bond Yield
Long term spread : 1.99
Current spread : 1.66
Lower UST will bring positive impact on Indonesia’s FCY Sovereign Bonds…
(%)
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oct-1
0
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
Oct-1
1
Ja
n-1
2
Ap
r-1
2
Ju
l-1
2
Oct-1
2
Ja
n-1
3
Ap
r-1
3
Ju
l-1
3
Oct-1
3
Ja
n-1
4
Ap
r-1
4
Ju
l-1
4
Oct-1
4
Ja
n-1
5
Ap
r-1
5
Ju
l-1
5
Oct-1
5
Ja
n-1
6
Ap
r-1
6
Ju
l-1
6
US Govt. Bond Yield 10-yr ID USD Govt. Bond Yield 10-yr
spread 10-yr US vs. 10-yr ID USD Govt. Bond Yield
Long term spread : 1.89
Current spread : 1.92
10-yr US Govt. Bond Yield vs. 10-yr ID USD Govt. Bond Yield
35
© PT Bank Mandiri (Persero) Tbk.
5-yr US Govt. Bond Yield vs. 5-yr ID IDR Govt. Bond Yield
Source: Bloomberg, as of 12 July 2016
(%)
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oct-1
0
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
Oct-1
1
Ja
n-1
2
Ap
r-1
2
Ju
l-1
2
Oct-1
2
Ja
n-1
3
Ap
r-1
3
Ju
l-1
3
Oct-1
3
Ja
n-1
4
Ap
r-1
4
Ju
l-1
4
Oct-1
4
Ja
n-1
5
Ap
r-1
5
Ju
l-1
5
Oct-1
5
Ja
n-1
6
Ap
r-1
6
Ju
l-1
6
US Govt. Bond Yield 5-yr ID IDR Govt. Bond Yield 5-yr
spread 5-yr US vs. 5-yr ID IDR Govt. Bond Yield
Long term spread : 5.66
Current spread : 5.98
(%)
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Ja
n-1
0
Ap
r-1
0
Ju
l-1
0
Oct-1
0
Ja
n-1
1
Ap
r-1
1
Ju
l-1
1
Oct-1
1
Ja
n-1
2
Ap
r-1
2
Ju
l-1
2
Oct-1
2
Ja
n-1
3
Ap
r-1
3
Ju
l-1
3
Oct-1
3
Ja
n-1
4
Ap
r-1
4
Ju
l-1
4
Oct-1
4
Ja
n-1
5
Ap
r-1
5
Ju
l-1
5
Oct-1
5
Ja
n-1
6
Ap
r-1
6
Ju
l-1
6
US Govt. Bond Yield 10-yr ID IDR Govt. Bond Yield 10-yr
spread 10-yr US vs. 10-yr ID IDR Govt. Bond Yield
Long term spread : 5.13
Current spread : 5.70
10-yr US Govt. Bond Yield vs. 10-yr ID IDR Govt. Bond Yield
…and on Indonesia’s LCY Sovereign Bonds
36
© PT Bank Mandiri (Persero) Tbk.
10-yr US Govt. Bond Yield, 10-yr ID USD Govt. Bond Yield & Fed Funds Rate Forecast
Period 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
10-yr US Govt. Bond Yield (%) 1.77 1.47 1.56 1.72 1.90 2.03 2.23 2.45
Period 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
10-yr ID USD Govt. Bond Yield
(%) 4.14 3.64 3.99 4.09 4.38 4.60 4.88 5.31
Source: Bloomberg, OCE Calculation
Period 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17
Fed Funds Rate (%) 0.5 0.5 0.55 0.65 0.80 1.00 1.10 1.25
37
© PT Bank Mandiri (Persero) Tbk.
There are still some positive catalysts in the Indonesia bond market
Positive catalyst Result Outlook
• FFR hike will be very gradual
and different from the previous
periods' hikes
FOMC meeting June-2016: More
dovish outlook.
Positive. The 10-yr UST yield still
lower than our forecast i.e. 2.5%
YE2016 (vs. 1.64% as of 9-Jun).
Market consensus lowering 10-yr
UST yield forecast to 2.11%
• Foreign fund inflows remained
encouraging
Foreigners became the biggest net
buyers ytd totaling Rp63.7tn as of
15-Apr (vs. Rp45tn same period last
year and Rp97.2tn)
Negative. 5-yr CDS still higher than
our forecast, i.e. 175 (vs. 197). We
still expect S&P will upgrade our
rating to BBB- next 6 months.
• Bank Indonesia and domestic
buyers should be supportive
for bond market
• Insurances and pension funds
reported net buyers of Rp52.2tn
as of 6-Jun or already higher than
their net buys of full year 2015,
i.e.27.5tn
• Bank Indonesia reported net
seller ytd
Neutral
• Already achieve to fulfill the new
regulation from OJK. New draft
regulation OJK might decrease
demand of government bond.
• On average BI bought Rp23.3tn of
government bonds per year in the
last three years with average yield
of buying at 8%
• Supply/Demand for
government bond still
manageable
The government did front loading
and was successful. YTD issuances
of Rp296.9tn –gross issuances or
54.3% of issuance target this year
Negative
There will be additional Rp57tn of
bond issuances assuming budget
deficit widened to 2.5% of GDP 38
© PT Bank Mandiri (Persero) Tbk. Source: BIS, last updated in July 2016
appreciate
depreciate
REER, 2010 = 100
125.0
76.077.0
90.0
103.0
82.2
106.7
82.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
110.0
120.0
130.0
140.0
Jan-
10
Apr
-10
Jul-
10
Oct
-10
Jan-
11
Apr
-11
Jul-
11
Oct
-11
Jan-
12
Apr
-12
Jul-
12
Oct
-12
Jan-
13
Apr
-13
Jul-
13
Oct
-13
Jan-
14
Apr
-14
Jul-
14
Oct
-14
Jan-
15
Apr
-15
Jul-
15
Oct
-15
Jan-
16
Apr
-16
China Russia Brazil
Indonesia ASEAN-5 excl. Indonesia Turkey
Korea Fragile 5 excl. Indonesia
The Rupiah is still undervalued (based on REER calculation), but BI is reluctant to let the Rupiah stronger while accumulating reserves
39
© PT Bank Mandiri (Persero) Tbk.
2012 2013 2014 2015F
2016F
2017F
Real GDP (%, yoy) 6.0 5.6 5.0 4.7 5.0 5.4
Rp/US$ (avg) 9,380 10,452 11,878 13,470 13,348 13,950
Rp/US$ (eop) 9,670 12,189 12,440 14,000 13,400 13,100
BI rate (%, eop) 5.80 7.50 7.80 7.50 6.25 -
7-day repo rate 5.00 5.00
CPI inflation (%, yoy, eop) 3.7 8.1 8.4 3.2 4.5 5.0
CAD (% of GDP) -2.8 -3.2 -3 -2.0 -2.4 -2.8
PT Bank Mandiri (Persero), Tbk. Forecast Indikator ekonomi 2016 - 2017
© PT Bank Mandiri (Persero) Tbk.
41
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