Progress & Challenges to be Sustainable Corporate: BNI Experiences

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TBLI ConferenceTokyo, May 27-28 2010

Progress & Challenges to Progress & Challenges to be Sustainable be Sustainable Corporate: Corporate: BNI ExperiencesBNI Experiences

Ahdi J. LuddinAhdi J. LuddinManaging DirectorPT.Bank Negara Indonesia (Persero), Tbk

2 Apr 11, 2023

AgendaAgenda

Strategy & ApproachStrategy & Approach

ProgressProgress

ChallengesChallenges

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Climate Change (impact to balancing of human

life over the world)

Business Challenges (tight and tend to hyper

competition)

Sustainable Growth (performance by optimizing

corporate resources)

Competitive Advantages (giving values

to all stake holders)

Competitive Company (domestic and global player)

Why Sustainable Why Sustainable Corporate?Corporate?

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Sustainability is one of the key words in modern and future business. As a big and prominent bank, BNI have a strong commitment to become a leader in implementing sustainability in Indonesia.

In achieving sustainability, BNI takes a structural approach. It should be inherent instead of sporadic. Sustainability should be embedded in every BNI’s business decision and operations.

The basic strategy is to start from within, working our way to the outside. The strategy takes four initial steps.

Changing the mind-set of all BNI employees and management regarding sustainability.

Formulating a realistic and not-too ambitious key performance indicators.

Starting from the low-hanging fruit, by implementing simple sustainability programs that produce immediate results.

Implementing the medium-term Sustainability Roadmap

Basic Approach & Basic Approach & Strategy (1/2)Strategy (1/2)

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Create Value with Values ….

Business Paradigm

Business Policy, Decision &

Action

Boosting Competitivenes

s

Business Competitivenes

s

Basic Approach & Basic Approach & Strategy (2/2)Strategy (2/2)

Create Value with Values

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Initiatives H2 - 2009 H1 - 2010 H2 - 2010 H1 - 2011

New Value Creation

BNI Green

Engagement Green Economic Value BNI to all related

Stakeholders

Business Process

Mainstreaming Green paradigm

into product features

Policy developmen

t

Internalization & deployment Green

Policy

Competency building

CapacityBuilding creating green economy

awareness

Implementation PlanImplementation Plan

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AgendaAgenda


ProgressProgress


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Progress Frame Progress Frame WorkWork

Today

ExternalInternal

Tomorrow

Sustainable Value

To see our progress, we put our achievements into sustainable value framework *) …

Drivers:

•Disruption•Clean tech•Footprint

Drivers:

•Pollution•Material

Consumption

•Waste

Drivers:

•Climate change

•Resources depletion

•Poverty

Drivers:

•Civil Society•Transparency•Connectivity

*) Adopted from S Hart & M Milstein

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Today

Internal

Sustainable Value

• Starting internally from Green Attitude of employees to provide green banking to customers:

Composing a “Green Attitude Hand Book” Employee Awareness Workshop Bike to Work, Car Pooling

• Green Office: Reduce, Reuse, Recycle Saving from lamp Rainwater harvesting Installing STP (Sewage Treatment Plant) Developing a paperless office using the

intranet based EMPlus Redesigning forms layout

• Good corporate governance and risk management (incl. risk culture)

Cost & Risk Reduction

ProgressProgress

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Today

External

Sustainable Value

• Participated at UNEP-FI • Participated at several WWF Program• Participated at LEAD International Workshop• Developed “Kampoeng BNI” in order to

empowering society, improving welfare.• Developed “Rumah Bankik Basamo”.

Collaborated with BNI Labor Union and Bamuis (LAZ) BNI to help community of earthquake victims in Padang.

• Boekit Hijau BNI in Imogiri• BNI engage any communities development,

green community and social activities • BNI has been selected as one of the banks that

are listed in SRI - Kehati.

Reputation and Legitimacy

ProgressProgress

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Internal

Sustainable Value

• Create unit in charge : “Corporate Sustainability Team”

• To ensure the integrity and security of its information technology, BNI implements ISO 9001:2000 and ISO 27001

• Enhance continuously ‘clean’ business process eLO (electronic Loan Origination), an IT-based

for Credit Application service Smart remittance, an internet-based money

transfer service SMS banking Internet banking Electronic statement and credit card

statement • Customer total solution approach

Innovation & Repositioning

ProgressProgress

Tomorrow

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External

Tomorrow

Sustainable Value

• Restatement one of Mission BNI : “Improving responsibility & fostering environment and community

• Aggressive growth, market share and profitability by implementing Customer Centric Operating Model

• Develop environmentally friendly financing; MOU with Green Works Asia and Climate

Change Capital Limited (London, UK) to support Clean Development Mechanism (CDM) Programs.

BNI Griya : A Pioneer in Green Mortgage Improving green lending portfolio

(geothermal, mini hydro, forestry, agribusiness, etc)

• Extending partnership with greener developers and merchants;

• BNI has been assigned by the Indonesian Ministry of Environment (KLH) to become a bank to channel soft loans for environmental projects.

Sustainable Growth Trajectory

ProgressProgress

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Concentration Policy

Pricing, Risk

Assessment

Capital Allocation

Commitment decision

•Loan reviews

•Monitoring

•Portfolio reporting

Active portfolio management

Risk adjusted performance measurement

Rating System

Provision for Losses

Rating MigrationRating Migration

Environmental Environmental Assessment in IRSAssessment in IRS

Specific on Credit Risk Assessment ….

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Organization

Human Resources

Credit Culture

Information Technology

Infra-structure

Marketing Analysis Approval Crd.Adm. Monitoring

Strategic Planning

Loan Portfolio Planning

Target market

identification

Prospecting

Market Campaign

Pre-screening

Appetite, risk-reward target

Data & Verification

Scoring or IRS

Credit Analysis

PD,LGD,EAD Calculation

Credit Package

Credit Approval

Limit Managemen

t

Pricing Model

Compliance

Early Warning System

Facility Structure Credit

Documentation

Booking transaction

Collateral Valuation

Remedial

Commit-ment Letter

Loan Review

Early Warning System

Utilization and

Repayment

Legal, & Administra

tion

Collateral / coverage

Restruc-turing

Asset managemen

t

Collection & recovery

Loan Origination / Acquisition

Litigation

Monitoring & Control Portfolio Optimization

Portfolio Analysis

Provision/Coverage

Strategic, Planning & Budgeting

Portfolio risk

overview

Performance Measurement

(RAROC)

Customer Profitability

Exception Monitoring

Optimization

Active Portfolio

Management

Loan sales / risk transfer

Capital Allocation

Stress Testing

Regulatory/ economic

capital

In the future … Credit Process & Credit Process & Environmental Environmental AssessmentAssessment

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Corporate Corporate Sustainable TeamSustainable Team

Educate and improving

awareness about the importance of sustainability

Well Being(West)

Economy

(East)

Society(South)

Nature(North)

•Increase portfolio green lending

•Green institution fund

•Efficiency (R3)

Participating active in environmental management

•Community development

•Engagement green community

Compass Paradigm / Stream

Managing Sustainability …

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AgendaAgenda


ProgressProgress


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EXTERNAL

Limited partner : Limited partner : Green spirit’s not common yet for domestic company

Regulation :Regulation :Unequal playing field for implementing green policy

EXTERNAL

Limited partner : Limited partner : Green spirit’s not common yet for domestic company

Regulation :Regulation :Unequal playing field for implementing green policy

INTERNAL

Number of channel distribution : Number of channel distribution : Wide of covering area (+/- 1000 local + 5 abroad outlets)

Characteristic employee :Characteristic employee : Large number (+/- 23.000) & multi background (educational, culture, etc)

INTERNAL

Number of channel distribution : Number of channel distribution : Wide of covering area (+/- 1000 local + 5 abroad outlets)

Characteristic employee :Characteristic employee : Large number (+/- 23.000) & multi background (educational, culture, etc)

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AccoladesAccolades

Best Corporate Governance , from Euromoney Magazine

‘Best Managed and Governed Companies -Asia poll 2010 .

Green Leadership Award & Community Engagement Award, from Asia Responsible Entrepreneurship Award, 2009

Green Property Award 2009

Progress & Challenges to be Sustainable Corporate: BNI Experiences

Economy & Finance

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