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Citibank is the consumer and corporate banking arm of the
financial services giant Citigroup. It has operations in more than 40
countries, including Indonesia since 1968.
Recently, The Jakarta Post talked to Peter Eliot, the president
director of Citibank Indonesia, about the bank's services and the
Indonesian economy.
Can you tell us about Citibank's performance this year? 2006 has really
been a good year for Citibank. We have launched many new products and
services for our customers. We listen to our customers in terms of what
products and services they would
like to see from us. And we listen to our employees in terms of what
products and services our customers are asking from us.
Last year we got Rp 1 trillion in net income. The reason for the good
performance is because of customers. Customers who know that Citibank
is a strong bank. It has a very strong balance sheet, and has a very
strong level of services delivery for customers.
We're also very diversified. We've been here for many years. We have
six major businesses here. And they are all doing well.
How do you see your bank's performance next year? I'm optimistic that
next year should be a continuation of this year. We see that the
economy continues to improve. With the economy improving, our customers
will also be better next year. And then in turn it will better our
performance.
If we look at the macro financial condition, the situation is improving
and getting better here. I'm optimistic about next year. So all
businesses, not just one business, will perform well.
But Citibank is a prudent bank. The lowering of the interest rate next
year does not mean we'll be lending more money to anybody. We might be
doing more lending next year but at the same time we'll continue to be
conservative and selective in providing credit.
Do you think the major assumptions used in the 2007 budget that were
approved by the House recently are realistic enough so there will be no
need for any painful adjustments next year? I think all the assumptions
are reasonable. Economic growth of 6.3 percent for next year is
reasonable. Again I'm optimistic about next year.
I think that in terms of various sectors of the economy here, whether
it's oil and gas, mining, palm oil, or consumers goods, they've all got
tremendous opportunities. So I certainly hope Indonesia will achieve
the 6.3 percent growth. Perhaps it'll be higher. And we at Citibank
will do everything we can to help stimulate the economy to reach higher
growth. But I think 6.3 percent growth is reasonable.
I think the inflation rate of 6.5 percent is also reasonable. That's
good news.
But the interest rate of 8.5 percent maybe a little bit too low.
Actually, it depends really on the rest of the world.
Indonesia cannot act in isolation. I think the central bank here is a
bit too fast forward and is dropping the interest rate too quickly.
That could create pressure on the rupiah. We saw that happen and we
don't want to see it again.
But I think the Indonesian central bank is very much on top of the
situation. They know exactly what's going on in the market. I have
tremendous respect for their capability.
Also the assumption of the Rp 9,300 exchange rate against the dollar
seems to be right. It will be good for exporters as well as for
importers.
Do you think the macroeconomic stability has been strong enough so that
there are not many downside risks from domestic or external factors? I
think the combination of people -- Boediono, Sri Mulyani and
Burhanuddin Abdullah -- handling economic matters is the A-team. They
have done a fantastic job in keeping fiscal spending very much under
control, giving the market a lot of confidence that management of the
monetary and fiscal policy is well managed. When I talk about the
market, I mean the domestic market and the international investors.
The performance of the Finance Ministry and the central bank is an A.
So I think the economic team under the president (Susilo Bambang
Yudhoyono) is a strong shock-absorber, which can handle any internal
and external events that might affect the market.
How about the strength of the financial sector? Has the bank
consolidation process been fast enough to build a sound, strong banking
industry? One of the reasons the Indonesian banking industry has come a
long way in the last few years is the Citibank alumni, who run the
banking sector. If you look at any bank here, they are there.
Citibank is like the university of banks in Indonesia. A lot of bankers
here are former employees of Citibank. We trust them because they are
well-trained and have a high level of integrity. Indonesia is proud of
them. Citibank is proud to have given such a contribution to the
Indonesian banking sector.
Then we see the central bank is improving governance, policy and its
regulatory function. I think these two factors have helped strengthen
the banking industry.
In terms of the consolidation process, I agree with the central bank
that the strengthening of the banking structure is something that we
have to have to help the economy.
I think there will be consolidation. It's a good thing that will
improve the level of competition we have. And competition is a good
thing that will make everybody strive to provide better and better
services to our customers. The better the competition the better the
services that will be given to customers.
Foreign capital inflow is still dominated by portfolio capital. Don't
you think this has made the financial market prone to shocks? A lot of
the money is real money accounts and real investment dollars in
Indonesia. We see investors come to Indonesia. They come and talk to us
about how to invest here. So Citibank is also the ambassador of
Indonesia in terms investing in the country. We see that if Indonesia
is prosperous then Citibank will also be prosperous. That's a mutually
beneficial relationship.
So I'm not concerned about such a condition. There may be some
moderation, a soft landing. But I'm very confident in the ability of
the central bank and the Finance Ministry to manage the economy.
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