Bank OCBC Nisp

Bank OCBC NISP is an Indonesian banking and financial services group, owned and managed by Singapore’s OCBC (Oversea-Chinese Banking Corporation). The company was first established in 1941 and has a strong track-record as a mid-sized bank operating in 60 cities across the archipelago.

Why do we like the investment?

We invested in this company long before OCBC became the major shareholder. What attracted us beyond the big picture of being in the attractive business of banking in a fast growing economy were the core values of the founding Surjaudaja family. They avoided lending large sums to the politically connected and instead concentrated on the consumer and small and medium sized enterprises. Thus the bank survived the Asian crisis of the late 90s in good shape, subsequently attracting Singapore’s OCBC, another solid conservative bank, as its largest shareholder.

Encouragingly dedicated family members still remain at the helm and we have a history of 25 years of close contact. First of all, we trust the bank’s parent (OCBC) who controls the business with a 85% stake and have proven to be good stewards of capital. We know the group well given our many years of interaction and co-investment in Singapore. This comfort on governance is reinforced by the bank’s strong risk management capabilities with minimal non-performing loans even at times of great economic stress such as during the Asian financial crisis.

Finally, we are attracted to the potential for continued credit growth in Indonesia, given the country’s large unbanked population and low credit penetration; the healthy margins enjoyed by the sector more broadly, and the very cheap valuations for the stock which is distorted by poor liquidity and means the bank trades at a fraction of the multiples of its peers in Price/Book terms.