Moving into the platinum society

In the middle of November a group of journalists from Indonesia were flown to Kuala Lumpur for a short break at the Royale Bintang Hotel. It’s located at The Curve – a new township on the edge of the rapidly changing Malaysian capital.

We were met by Bank Niaga executives who were hosting a press conference to launch the Niaga Platinum Credit Card, a new product provided by the bank for the ‘platinum’ society. 

“We want the card to also be known in Malaysia, since both countries have close business and economics ties. And it’s a fact that the CIMB Group’s base is Malaysia” says president director of Bank Niaga, Hashemi Albakri Abu Bakar.

James D Rompas, vice president director of Bank Niaga, explains that the Niaga Platinum Card is targeted at middle class bank customers who see themselves as passionate, proud and powerful. 

The bank is aiming to gain 370,000 customers by the end of 2007, says James.  The target is part of Bank Niaga’s efforts to keep growing its market, which swelled by 45% during the year, with a 35% increase in sales volume.

The platinum card is focused on the top of the market and the bank aims to hand out only 12,000 of the cards during 2008. They will come mostly from existing ‘preferred circle” card holders. “We are also targeting 1,000 private banking customers,” says James.

Bank Indonesia data shows that there are already at least 8 million credit card holders in Indonesia, with the figure expected to reach 8.5 million by February, and with annual average growth of 15 % per year.

Careful selection of card holders has kept non-performing loans down. In the consumer credit section, which includes credit card debt, non-performing loans stand at only 3.4%.

The platinum set

Bank Niaga isn’t the first Indonesian bank to ‘go platinum’. Bank Mandiri, Bank BRI, UOB Bank, Bank Panin and Bank Central Asia all offer platinum cards for top-drawer customers.

“The competition is getting tight, but there is always room for maneuver,” says banking analyst Rudy Gunadi.

At the Kuala Lumpur press conference, CIMB Group chief executive Datuk Nazir Razak states that the group has a long-term asset to its operations in Indonesia. Its operations consist of Bank Niaga, in which it has a 64% stake, CIMB-GK Securities (100%) and Niaga Asset Management (100%). All the companies will expand their business in line with Indonesia’s economic growth.

Datuk Nazir doesn’t deny the possibility of a merger between Bank Niaga and Lippo, since both banks are ultimately owned by Khazanah Bhd. “We will make an announcement soon, once the single presence policy of Bank Indonesia is completed,” he says.
“Everything is on the drawing board at the moment,” says Bank Niaga president director Hashemi.

Datuk Nazir also argues that CIMB not only acts just as a shareholder, but also guards the long-term development of business between Bank Niaga and CIMB.  For instance, both CIMB and Bank Niaga recently launched Star Choice Market Linked Deposit, a first rupiah-denominated product of its type in Indonesia.

CIMB recognizes that Indonesia is a major potential market, and Hashemi adds that the group is determined to create more shariah products while waiting for further regulation.

“If the regulations are clear we will do as we have done in Malaysia,” says Datuk Nazir, stressing that Bank Niaga is in a strong position to market shariah products in Indonesia. “Niaga has strong brand equity both in Indonesia and Malaysia,” he stresses.

As for acquisition plans, CIMB will consider any proposal as long as it gives benefit to the group, especially in terms of added value.

“Just buying a company is a simple task, but the question is whether the decision fits with the company’s condition or external trends or not,” says James Rompas.