Profits booked by major Indonesian digital banks indicates that digital banks are still capable of funding itself internally. Bank Jago Tbk PT, PT Bank Neo Commerce, and Allo Bank Indonesia Tbk PT. have all recorded profits in Q4 of 2022.
For example, Bank Jago currently has a CASA ratio of just over 70% and a cost of funds of around 2%. This number suggests that the bank is in good position to grow its loan book. In addition, the bank is also generating a net interest margin of 10%, which is significantly above the top four banks in Indonesia whose NIMs range between 4.6 to 7.8%.
Meanwhile, Allo Bank, backed by the CT Group and Bukalapak, Salim Group, Grab Holdings, Traveloka Indonesia, and Carro, is currently enjoying rich online and offline presence with potential to achieve 100 million customers. The bank also reported its FY2022 results recently.
Allo bank recorded 40% YoY growth in net profit for fiscal year 2022 to IDR 270 billion. The bank’s success is driven by a net interest income, which experienced an extreme surge of 221% YoY to IDR 627.2 billion from only IDR 195.32 billion in FY 2021.
It is still early days for AlloBank, but it is already showing promise and has the strong potential to be one of the “Big Four” digital banks, given the ecosystem it is plugged into.
As for the broader market, it remains unclear whether Indonesia is ready for the wholesale adoption of digital banks. Nevertheless, digital banks are certainly important to propel growth in consumer banking and for MSMEs.
