BBRI_AnnualReport16.pdf - Annual Report 2016 2016 Annual...

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Unformatted text preview: Annual Report 2016 2016 Annual Report 2016 Annual Report Contributing to the Nation Developing Leading MSMEs in the Digital Era Contributing to the Nation Developing Leading MSMEs in the Digital Era Contributing to the Nation PT Bank Rakyat Indonesia (Persero) Tbk. Head Office Gedung BRI 1 Jl. Jenderal Sudirman Kav. 44-46 Jakarta 10210 Indonesia Tel. : (62-21) 2510244, 2510254 Fax. : (62-21) 2500065, 2500077 Developing Leading MSMEs in the Digital Era UMKM Digital Technological Advances Sustainable Business Financial Inclusion Prudential Banking 1 Contributing to the Nation Developing Leading MSMEs in the Digital Era Throughout its history, BRI has always been faithful to its purpose and objective as a Government owned bank with a main role of supporting national economic development. To achieve this, BRI has focused on Micro, Small and Medium-Sized Enterprises (MSMEs), which constitute the backbone of the Indonesian economy by making significant contributions to the Gross Domestic Product (GDP) and manpower absorption. BRI’s support of the MSME sector differentiates it from other companies within the competitive banking industry in Indonesia, and is a strategic tactic to ensure the sustainability of BRI in the future. BRI adapts and proactively responds to changes, a strategy that has enabled the Bank to survive as one of the leading banks in Indonesia. The digital era has changed our lives, from personal interactions and running daily activities to the way we conduct business. Such changes have occurred due to the continuous technological advances. BRI views the dynamics of the digital era as an opportunity to innovate, and to provide better, faster and more convenient services. BRI integrated digital technology into its initiatives and strategic projects in 2016. The launch of BRIsat in June 2016, for example, marked an important milestone that highlights the way BRI utilizes advances in information technology in the latest forms of communication. The theme of BRI’s 2016 Annual Report, “Contribute to the Nation, Developing Leading SMEs in the Digital Era” reflects BRI’s determination to continue to innovate, and leverage the capabilities of digital banking technology to develop and enhance the potential of the SME sector in Indonesia. This determination is also a part of BRI’s efforts to help realize the Nawacita program in economic development that envisions a self-sufficient Indonesia. 2016 Annual Report BRI 2 Annual Reports Theme Continuity The themes of BRI’s annual reports since 2012 and up to 2016 are indicative of BRI’s consistent efforts over those years to ensure sustainable growth based on governance integrity and an ability to innovate, through the utilization of advanced technology, so as to be able to provide the best quality services especially for customers in the micro, small and medium enterprise sector throughout Indonesia. 2014 2013 Continuous Innovations in Extending Services Built Upon Integrity and Cutting Edge Technology 2012 Good Governance and Innovation: Our Foundation for Sustainability Development Consistent implementation of Good Corporate Governance (GCG) has led the Bank’s operations, enabling it to gain stakeholders’ trust and to increase its corporate value, as well as to ensure a sustainable growth. By upholding the GCG principles, BRI is confident to reach its target to becoming the Indonesia’s most valuable bank. Achieving the Best through Excellent Services Reaching Across the Archipelago A Bank with the Best Growth in Micro, Small, and Medium Enterprise Business in Indonesia Bank BRI’s consistency in advancing Indonesia’s economy through providing quality banking, financial and other services, as well as its unwavering focus on micro, small, and medium enterprise segments, whilst growing other business segments, supported by an extensive operational network covering the entire country, yielded excellent achievements. Bank BRI is able to deliver the best MSME loan growth, increasing its total assets to Rp626.18 trillion and total loans rose to Rp448.35 trillion, while maintaining non performing loan at 1.63%. These results contributed to the increase in net profit, which grew by 14.3% to Rp21.35 trillion. Bank BRI is committed to optimize synergy in all its lines of business, to generate quality and maintain sustainable growth. BRI 2016 Annual Report Demonstrates a strong commitment to support the development of micro, small, and medium enterprises as well as other segments throughout the country. BRI has consistently invested in network expansion and human resources development to enhance services quality and human resources competence. Aiming to become a Bank with the best and sustainable performance through productive and efficient network and human resources to support the customers’ business growth across the archipelago. 3 TECHNOLOGY DIGITAL EDGES INFRASTRUCTURE E-BANKING E-COMMERCE RISK MANAGEMENT E-OFFICE BANCASSURANCE SERVICES Rp SECURE ACCESS GOVERNANCE MARKET RESEARCH MOBILE PAYMENTS LENDING TRANSACTION The Biggest National Payment Bank Harnessing Technology to Reach Across the Archipelago Making the Vision of a People’s Economy a Reality 2015 ANNUAL REPORT 2015 The Biggest National Payment Bank Harnessing Technology to Reach Across the Archipelago Making the Vision of a People’s economy a Reality In 2015, BRI focused on the Bank’s development and identified a number of key leveraging factors for the Bank’s performance, namely technology, innovation and network. We realized that rapid technology development, demographic shifts in terms of age and the migration from rural to urban areas, as well as globalization, have all contributed to changing lifestyles and preferences. In addition, massive, rapid and disruptive changes have also changed the landscape of business competition. 2016 Contributing to the Nation Developing Leading MSMEs in the Digital Era Throughout its history, BRI has always been faithful to its purpose and objective as a Government owned bank with a main role of supporting the national economic development. To achieve this, BRI has been focusing on Micro, Small and Medium-sized Enterprises (MSMEs), BRI adapts and proactively responds to changes, a strategy that has enabled the Bank to survive as one of the leading banks in Indonesia. From personal interactions and running daily activities to the way we conduct business, the digital era has changed our lives. Such changes have occurred due to the continuous technological developments. BRI views the dynamics of the digital era as an opportunity to innovate, and to provide better, faster and more convenient services. 2016 Annual Report BRI 4 Contents 08 10 12 14 16 18 20 Consistent to the Roots Adaptive to Progress Bringing the Benefits of Digitalization to MSME Providing More People with Easier Access to Banking World-Class Governance towards Sustainable Value Creation From the Orbit Serving the Nation 2016 Performance Highlights Sustainable Value Creation Performance Highlights 18 22 24 26 28 32 Financial Highlights Stock Highlights Bonds Highlights Event Highlights 2016 Awards and Certification 36 Report of the Board of Commissioners 38 Report on the Supervisory Duties of the Board of Commissioners in 2016 Corporate Profile 62 General Information 63 Corporate Identity 64 Bank BRI at a Glance 66 Our Journey Board of Commissioners 68 Vision & Mission Report of the Board of Directors 70 BRI Corporate Culture 56 Board of Directors 78 Operation Areas, Branch and E-Channel Network 58 Accountability Statement from Members of the Board of Commissioners and Board of Directors 80 Office Network 46 48 BRI 2016 Annual Report 69 Core Values 72 Line of Business 74 Products and Services 84 Organization Structure 86 Board of Commissioners’ Profiles 92 Board of Directors’ Profiles 98 Senior Executive Vice President (SEVP) Profiles 100 Senior Executives 104 Employee Composition and Competence Development 106 Shareholders Composition 109 Subsidiaries 109 Corporate Group Structure 110 Share Listing Chronology 113 Capital Market Supporting Institutions 114 2016 Rating 115 Corporate Website 5 159 Corporate Governance Report Marketing Aspect 162 Financial Review Management Discussion and Analysis 118 Banking and Macroeconomic Review 162 Balance Sheets 170 Equity 171 Income Statements 176 Statement of Cash Flows 177 Financial Ratios 178 Ability to Meet Bank Obligations 179 Loan Collectibility 179 Capital Structure 180 Material Commitments for Capital Expenditure 181 Capital Goods Investment 181 Hedging Policy 182 Commitments and Contingencies 183 Prime Lending Rate 183 Target and Realization 2016 184 2017 Target 184 Information and Material Facts Subsequent to Date of Reporting Period 184 Dividend Policy 185 Contribution to the Country 185 Employee/Management Stock Option Plan 186 Use of Proceeds from IPO 186 Material information and Facts on Investment, Expansion, Divestment, Acquisition or Debt/Capital Restructuring 187 Material Information on Transactions Carrying Conflict of Interest and/or Transactions with Affiliated Parties 190 Changes of Regulation with Significant Impacts to the Bank 193 Changes in Accounting Policy 195 Business Continuity Information 196 Capital 199 Implementation of Risk Management 257 Business Prospects in 2017 258 Bank Strategic Plan 122 Business Review 122 Business Segment 124 Micro & Program Business 132 139 144 125 Micro Business 128 BRILink 130 Program Business Retail Business 133 Consumer Retail Loan Business 135 Commercial and MediumSized Enterprise Retail Loan Business 136 Retail Deposit Business 137 Retail Banking Services Business Corporate Business 140 International Business 141 Treasury Business 142 Capital Market Support Business Subsidiary Business 145 PT Bank BRISyariah (BRI Syariah) 148 PT Bank Rakyat Indonesia Agroniaga Tbk (BRI Agro) 152 BRI Remittance Company Ltd (BRI Remittance) 154 PT Asuransi Jiwa Bringin Jiwa Sejahtera (BRI Life) 157 PT BRI Multifinance Indonesia (BRI Finance) 286 289 296 310 Operational Support Review 262 262 274 Human Resources Information Technology and Operations 318 Good Corporate Governance Execution and Implementation General Meeting of Shareholders (GMS) 296 Shareholders 296 Authority of GMS 296 GMS Legal Reference 296 Shareholders’ Rights and Responsibilities 297 Information Access for Shareholders 298 Invitation for Public Shareholders to Come and to Cast Vote 298 GMS Code of Conduct 298 GMS Chairman 298 GMS Resolutions 299 GMS Attendance and Decision Quorum 299 GMS Voting 300 Previous year GMS Resolutions 304 GMS In 2016 305 Attendance of Shareholders, Directors, and Commissioners in the GMS 305 Resolutions of GMS for 2016 309 Realization of GMS Resolutions and Reasons Behind Unrealized Resolutions Board of Commissioners 310 Responsibilities of the Board of Commissioners 312 Appointment of the Board of Commissioners 313 Orientation Program for New Commissioners and Training Program for Commissioners 315 Dismissal of Members of the Board of Commissioners 315 Board Charter and Code of Conduct of the Board of Commissioners 315 Assessment on the Performance of the Committees Assisting the Board of Commissioners 316 Independence of the Board of Commissioners Independent Commissioner 318 Criteria of Independent Commissioner 319 Independency Statement of Each Independent Commissioner 2016 Annual Report BRI 6 320 326 BRI Board of Directors 320 Board of Directors Members Criteria 321 Composition of the Board of Directors 322 Responsibilities of the Board of Directors 322 Division of Duties and Responsibilities 323 Division of Supervision Based on Region 323 Orientation Program for New Directors and Competency Development Program for the Board of Directors 325 Board Charter and the Code of Conduct of BOD 325 Performance Assessment for The Committees Supporting Directors Duties Performance Assessment of Board of Commissioners and Board of Directors 326 Procedure of the Board of Commissioners Performance Assessment 327 Procedure of the Board of Directors Performance Assessment 328 Board of Commissioners Performance Evaluation Criteria 329 Board of Directors Performance Assessment Criteria 331 Parties Conducting the Board of Commissioners Performance Assessment 331 Parties Conducting Board of Directors Performance Assessment 2016 Annual Report 332 338 356 358 368 376 382 390 398 400 Remuneration Policy 332 Remuneration Procedure on Board of Commissioners 333 Procedure and Determination of Board of Directors’ Remuneration 334 Board of Commissioners Remuneration Structure 335 Board of Directors Remuneration Structure 337 Indicators For Determination of Board of Directors Remuneration Board of Directors Meeting Frequency and Attendance 338 Policy 340 Date and Meeting Agenda 350 Meeting Frequency and Attendance 351 Meetings Result Affiliate Relations Diversity of The Board of Commissioners and Board of Directors 358 Diversity of the Board of Commissioners 364 Diversity of Board of Directors Audit Committee Nomination and Remuneration Committee (NRC) Risk Management Monitoring Committee (RMOC) Integrated Governance Committee (KTKT) Secretary to the Board of Commissioners Committees Under the Board of Directors 400 Asset and Liability Committee (ALCO) 401 408 413 415 418 425 426 Risk Management Committee (RMC) 402 Credit Committee 402 Capital & Investment Committee 404 Credit Policy Committee 404 IT Advisory Committee 405 HR Policy Committee 406 JOB Evaluation Committee 406 Project Management Office Steering Committee (PMO-SC) 407 Product Committee Corporate Secretary Investor Relations Compliance Function Internal Audit Public Accountant 425 Name and year of Public Accountant, Public Accounting Firm and financial statement Audit Fee in the last 5 years 425 Other Services Given By Public Accountant in the Latest Fiscal Year, Other Than Annual Financial Statement Audit Risk Management 426 Risk Management System 429 Effectiveness of the Evaluation of Risk Management System 430 Evaluation on Risk Management Process, Human Resource Adequacy and Risk Management Process Information System Adequacy 431 Evaluation on the Adequacy of Risk Control Systems 431 Explanation on Risks Faced by the Company 432 Efforts To Manage Risk 438 Integrated Implementation of Risk Management 7 Consolidated Financial Statements 517 Partnership Program and Community Development 749 440 444 445 446 456 458 463 465 466 466 467 467 468 469 469 470 Internal Control System Legal Cases Administrative Sanctions Information and Company Data Access Code of Conduct Whistleblowing System (WBS) 458 Whistleblowing Reporting Mechanism 459 Whistleblower Protection 459 Report Handling 462 WBS System Manager 462 Total WBS Reports Filed and Followed up in 2016 and Action Followed Implementation of Anti Money Laundering and Terrorism Funding Prevention Transparency on Bank Financial and Non Financial Conditions Transactions with Potential Conflict of Interest Share or Bond Buybacks Highest and Lowest Salary Ratio Provision of Funds to Related Parties and Provision of Large Funds Funds Disbursement for Social and Political Interests Information on Major and Controlling Shareholders Equal Treatment to All Shareholders Implementation Report of Corporate Governance Guidelines for Public Company Corporate Social Responsibility 483 486 490 496 510 CSR Policy and Implementation Guidelines 484 Vision and Mission of BRI CSR 484 Scope of Activities and Budget 484 BRI Peduli Budget 485 Management Structure Corporate Social Responsibility as it Pertains to the Environment 486 Policy and Implementation 488 Indonesia Lestari 489 Handling of Environment-Related Complaints 489 Certification Corporate Social Responsibility as it Pertains to Human Resources Corporate Social Responsibility as it Pertains to Social and Community Development 496 Community Development Program - BRI Peduli 497 Realization of Disbursement For Community Development Programs - BRI Peduli 507 BRI’S Anti-Corruption Policies and Procedures Corporate Social Responsibility as it Pertains to Customers 510 Customer Service Policy 511 Product Information Management 511 Customer Data Security 512 Customer Complaints Service 513 Customer Satisfaction Survey 514 Success Story of Fostered Partner Cross Reference of Annual Report Award 809 Reference SEOJK No. 30-SEOJK.04-2016: Annual Report for Listed Companies 821 Reference SEOJK No. 43-SEOJK.03-2016: Annual Report for Conventional Commercial Banks 831 2016 Annual Report BRI 8 History of BRI Consistent to the Roots Adaptive to Progress BRI has had a long journey of more than a century of leading the cause for a people’s economy, while at the same time remaining responsive in managing change and progress in line with the dynamics of the era and the business environment. 1969 1895 Assigned by the Government of Indonesia as the sole bank to distribute the Bimbingan Masal (Bimas) program loans. Established initially as a savings bank serving the local population in Purwokerto 1968 Change of name to Bank Rakyat Indonesia, as a governmentowned bank supporting the national economic development programs BRI 2016 Annual Report 1984 Started to manage the Micro Business line replacing the Bimas program 9 2003 2013 Listed its shares at the Stock Exchange Became the first bank in Indonesia to offer self-service banking services in the BRI Hybrid Banking network 2009 Launched the Teras BRI, an extension of the regular BRI Unit, proactively making the rounds to customers in the traditional wet markets, in tangible support of the Micro, Small and Medium Enterprises sector. 2016 Launched a telecommunication satellite, the BRIsat, in support of the development of digital banking services at BRI 2016 Annual Report BRI 10 Digitalization of BRI Bringing the Benefits of Digitalization to MSME In 2016, BRI launched a number of initiatives to bring the advantages of digital technology for the benefit of the MSME sector in Indonesia. e-Pasar BRI As a digital platform that provides the latest information on commodity prices and stock in traditional wet markets, the e-Pasar BRI, accessible through , enables direct interaction of market traders, thus increasing marketing reach and sales volume. 1 Million Free Domain BRI collaborated with the Ministry of Communications and Informatics to provide free domain facilities to 1 million MSME entrepreneurs in Indonesia. This is an effort by BRI to facilitate the digitalization of the MSME sector in order to successfully compete in the digital era in Indonesia and the global stage. BRI 2016 Annual Report 11 BRIsat With a footprint that covers the entire archipelago, to support the digitalization of BRI’s banking services. Teras BRI Digital BRI Digital Challenge BRI provides digital service centers at some 600 traditional wet markets throughout Indonesia. Teras BRI Digital facilities provide access to digital banking services for micro customers, pushing the digital inclusion to all segments of society. BRI encourages Indonesia’s start-ups with a competition to develop financial technology applications. The highlight of the event was the hackaton, where 121 teams competed to create digital products to empower the MSME sector and improve financial inclusion in Indonesia. UMKM BRI Digitalvolution An MSME festival for the digital era, being an exhibition of the leading products of the MSME sector, coupled with seminars and a coaching clinic on how to improve competitiveness and business capacity in the digital era. 2016 Annual Report BRI 12 Financial Inclusion Providing More People with Easier Access to Banking Indonesia still has a high rate of unbanked population. According to 2014 data from Global Findex World Bank, only 36% of the population aged 15 and above possess a bank account. Most people in Indonesia are not yet served by banks. BRI has a number of initiatives, such as BRILink Agent and Teras BRI Kapal, to facilitate the provision of banking services to the as yet un-reachabl...
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  • Summer '18
  • BRI, PT Bank Rakyat Indonesia

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