JAKARTA -- Indonesia's largest lender by assets, Bank Mandiri, expects Chinese and Singaporean business units to lead the growth of offshore operations this year, seeing an opening in a reduced presence by rival foreign banks in Asia.
Director of Treasury and Markets Pahala N. Mansury said Thursday that the offshore division is minuscule compared with domestic operations, contributing only 3% of total revenue last year.
But because they are small, the offshore operations have much room to grow, despite the region's slowing economy, Mansury said.
Mandiri expects overseas business units to book higher growth than domestic operations this year, partly on the back of the "reduced presence" of international banks in Asia, he said.
"Some of our customers in Singapore, Shanghai and Hong Kong used to be served by our competitors -- the foreign banks," Mansury said.
"And then they're reducing their capital allocations in Asia, and this is becoming an opportunity for us."
Loan disbursements through Chinese operations are expected to grow 44% this year, and in Singapore by 25%.
Customers of offshore operations are mainly Indonesian expatriates and foreign clients of customers living in Indonesia.
Overall, Mandiri expects overseas business assets to grow from the current $3 billion to between $3.3 billion and $3.5 billion by the end of the year.
The bank now operates seven branch offices outside the archipelago -- in Singapore, Shanghai, Hong Kong, Malaysia, East Timor, the U.K. and the Cayman Islands.
Mansury said that this year the bank has no plans to open new foreign branch offices but is intent on expanding its presence in Singapore, China and Malaysia.
In Singapore, subsidiaries Mandiri Sekuritas and Mandiri Manajemen Investasi have their own branch offices.
Mandiri wants to develop the Sekuritas branch into a Singaporean subsidiary and is waiting for local monetary authorities to approve its application for a capital market license.
"We hope to offer more varied services in Singapore -- not only loans, but also distribution bonds, for example," Mansury said. "Singapore is a financial hub. If we can do bond transactions in Singapore, surely it will push the growth of our overall business."
Chinese operations, meanwhile, are expected to get a boost now that the Shanghai office has secured a license to engage in yuan transactions. It was previously restricted to transactions in dollars.
"Many Chinese customers, as well as Indonesian customers in China, are switching from dollar to renminbi -- we can see the trend," said the head of the bank's Shanghai office.
"With this license, we naturally hope to promote two-way trade between [China and Indonesia], as well as [to serve] Chinese companies investing in Indonesia," he added.
With ASEAN financial integration underway, Mansury said Mandiri will focus on Southeast Asia for future expansion, although no precise plans are yet in motion outside the countries where Mandiri already has a presence.
In Malaysia, expansion plans are still pending approval, including on the number of branch offices Mandiri will be able to set up. The bank now operates only a remittance office in Malaysia.