0. 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. 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. 2. LDR of Top 10 Banks & Industry

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

5. 5. Customer Deposit Composition – Top 10 & Industry

6. 6. Non Customer Deposit Composition – Top 10 & Industry

7. 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. 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

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

10. 10. Cost of Loanable Funds VS

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

12. Harmonious Synergy
Thank You