Bank DBS Indonesia avails fast, reliable and sustainable corporate banking

Its ESG-based bank financing, as reflected in sales and asset under management, proves to be an IDR1.8t (US$117m) success.

Bank DBS Indonesia has exemplified its ability to adapt to the growing demand for Environmental, Social, and Governance (ESG) principles in the banking sector. Prioritising a cautious business approach, Bank DBS Indonesia has strategically integrated ESG principles into its corporate banking framework.

“We use comprehensive evaluation metrics that aligns with ESG criteria,” explained Heru Hatman, Executive Director of the Institutional Banking Group at PT Bank DBS Indonesia, during a recent interview with Asian Banking and Finance.

Hatman said Bank DBS Indonesia is committed to understanding the needs, risk profiles, and financial conditions of potential clients to offer sustainability-focused financing solutions. “Metrics for assessing environmental and social impacts include considerations such as carbon emissions, ecological footprints, waste reduction, and pollution control measures,” he said.

Furthermore, Bank DBS Indonesia is dedicated to fostering a fast, reliable, and sustainable ecosystem. This commitment extends to the expansion of financial services and technology through strategic collaborations with startups.

All these, Hatman said, resonate with the bank’s vision to positively impact consumers and businesses through its “Live more, Bank less” principle and mission of becoming the “Best Bank for a Better World”.

This philosophy is deeply ingrained in the bank’s campaigns, products, and services, all aimed at cultivating genuine concern and actions for sustainability among all stakeholders. “We maintain a consistent drive to integrate environmental sustainability into our banking solutions and operational practices,” he said.

Three pillars

Three core pillars shape DBS Group’s commitment to sustainability. First, ‘Responsible Banking’ focuses on ESG-driven financial products, including sustainable loans, Green Savings, and transition financing aligning with UN SDGs.

Secondly, ‘Responsible Business Practices’ emphasizes on doing the right thing by the people and embedding environmental and societal factors in the bank’s business operations, such as sustainable resource management and solar panel utilization.

Lastly, Impact Beyond Banking highlights programs like “People of Purpose” and the “Towards Zero Food Waste” initiative, aiming to make direct contributions to society and the environment.

Corporate credit trends

Regarding corporate credit trends, in 2021, DBS Group made a significant declaration to achieve zero thermal coal exposure by 2039. This marks a crucial step towards environmentally responsible financing.

As expressed in the Responsible Banking pillars, the main goal is to empower clients to be more sustainable, support their transition towards lower-carbon business models, and deliver customized solutions to meet their specific needs. DBS Group has identified and targeted nine key industries recognized as the largest contributors to global carbon impact: automotive, aviation, shipping, steel, food and agriculture, real estate, chemicals, energy, as well as oil and gas.

Hatman stated that the bank evaluates corporate credit trends related to ESG, witnessing growth momentum across various corporate segments. These trends encompass local companies, state-owned enterprises (SOEs), multinational corporations, and other financial institutions.

Bank DBS Indonesia has set clear targets for double-digit growth in several sectors. There is also a particular focus on the Electric Vehicle (EV) value chain and industry transition to green energy.

In relation to these targets, Bank DBS Indonesia maintains credit quality through rigorous research, vigilance, and sustainable quality control measures. “We deepen efforts to support clients transitioning to more environmentally friendly businesses or decarbonization by providing financing support through various banking products such as green loans/bonds, sustainability-linked loans/bonds, or transition loans/bonds,” said Hatman.

ESG financing success

DBS Group has excelled in concrete ESG-related financing initiatives, surpassing its SG$50-billion (US$37b) target with an achievement of SG$61b (US$46.25b) in 2022. Over 50% of this financing is dedicated to corporate banking.

“Bank DBS Indonesia allocated a total of IDR2 trillion (US$130m) for sustainable loans in 2022, supporting diverse clients such as eFishery, the first aquatech startup in Asia, and PT Jaya Bumi Paser supporting renewable energy development in line with emission reduction goals,” said Hatman.

The bank’s efforts continued into the third quarter of 2023, allocating around IDR4.3t (US$279.5m) for corporate sustainable financing and ESG-related projects. This commitment reflects Bank DBS Indonesia’s tangible support for corporate clients, reinforcing their sustainability goals while actively contributing to a greener economy.

The success of the bank’s ESG-based financing is reflected in nine attractive sukuk/green bonds, significantly piquing customer interest, with sales/Asset Under Management (AUM) reaching IDR1.8t (US$117m) throughout the year until August 2023.

Furthermore, another range of ESG-based mutual fund products is quite comprehensive, representing approximately 30% of the total ESG mutual funds in the industry, managing around 17.5% of the total AUM of ESG mutual funds in the industry.

Green Savings products have seen a 60% increase in customers since December 2022. Launched in 2021, this savings product has contributed over IDR1.47b (US$95,500), benefiting more than 750 cocoa farmers in achieving cocoa processing steps and tripling their income.