Managing Non Deposit Liabilities and Other Sources of Borrowed Funds Harmonious Synergy Managing Non Deposit Liabilities and Other Sources of Borrowed Funds Anwar Harsono S.E., MBA Management & Financial Accounting Group Head Bank CIMB Niaga Prasetya Mulya, 10 May 11

1. Bankwide Balance Sheet Highlight Consolidated Rp trillion Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Cash & Short Term Funds 20.38 20.53 14.29 22.94 20.16 Gov. Bonds & Marketable Sec. 7.62 11.57 16.13 12.71 14.93 Loans (Gross) 83.67 91.76 96.29 104.89 109.98 Loan Loss Provision (2.94) (3.38) (3.46) (3.28) (3.34) Fixed & Other Assets 5.86 5.85 5.89 6.39 7.32 Total Assets 114.59 126.33 129.14 143.65 149.05 Current Account 25.19 25.46 25.56 27.39 27.14 Savings 19.65 21.06 22.82 23.96 30.57 Time Deposits & CD 48.83 59.66 58.22 66.48 62.84 Total Customer Deposits 93.67 106.18 106.60 117.83 120.55 Other Liabilities 9.25 7.85 9.45 12.05 12.62 Total Liabilities 102.92 114.03 116.05 129.89 133.17 Equity 11.7 12.30 13.10 13.77 15.88

2. LDR of Top 10 Banks & Industry

3. Customer Relationship Doctrine the first priority of a lending institution is to make loans to all those customers from whom the lender expects to receive positive net earnings. The customer relationship doctrine spawned the liquidity management strategy known as ‘Liability Management’. Liability Management consists of buying funds, mainly from other financial institutions, in order to cover good quality credit requests and satisfy any legal reserve requirements on deposits and other borrowings that law or regulation may require. The hallmark of liability management are: Buying funds by selling liabilities in the money market Using price (the interest rate offered) as the control lever to regulate the volume and timing of incoming funds.

4. Source of Loanable Funds Customer Deposits Non Customer Deposit Liabilities Short-term Long-term Equity

5. Customer Deposit Composition – Top 10 & Industry

6. Non Customer Deposit Composition – Top 10 & Industry

7. Non Customer Deposit Liabilities Items Short – Term Funds Federal Funds Market Repurchase Agreements Borrowing from the Fed Reserve Bond in Market Borrowing form other banks Commercial Paper Advance from the Fed Negotiable CD Euro Currency Deposits Long – Term Funds Subordinated Debt (Subdebt) Marketable Securities Issued / Corporate Bonds Mortgage Issued Capital Notes and Debentures

8. Choosing among Alternative Non Customer Deposit Sources How much in total must be borrowed from these sources to meet funding needs? Which non customer deposit sources are best, given the borrowing institution’s goals, at any given moment in time? Need to consider: The relative costs of raising funds from each non customer deposit sources The risk (volatility and dependability) of each funding sources The length of time (maturity or term) for which funds are needed The size of the institution that requires non customer deposit funds Regulations limiting the use of alternative fund sources

Subordinated Debt Issuance 9. Non Deposit Funds that Impact to Capital Right Issues Subordinated Debt Issuance

10. Cost of Loanable Funds VS

Net Interest Income and NIM – Top 10 Banks NIM Ratio QoQ (%) 11

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