Good afternoon, ladies and gentlemen. Thank you for joining PT Bank Danamon Indonesia Tbk's investor and analyst briefing full year 2023 financial results. Before we begin, I would like to emphasize on the following information. We encourage participants to join this event by using laptop and use a headset to optimize the audio quality. Please ensure that you are joining from a closed room and quiet environment with a stable internet connection. During the event, please kindly mute your microphone and close your camera. Please also put your mobile phone in silent mode to avoid echo sound, and do not access the MS Teams link simultaneously in more than one device. When we begin the Q&A session, please do not hesitate to raise your questions. You can simply click the raise hand button and I will call your name, then please open your camera and unmute your microphone.
Alternatively, you can also type your question through the chat box menu, and I will read each question for our BOD members to respond. Please inform your name and company, and to whom the question is addressed to. Please also note that this event is live-streamed and accessible via Stockbit's YouTube channel and applications. The investor and analyst briefing event will start in a moment. Ladies and gentlemen, I would like to welcome our respective investors and analysts. Thank you for joining PT Bank Danamon Indonesia Tbk's investor and analyst briefing full year 2023 financial results. Today, I will be your host and please allow me to quickly introduce myself. My name is Yogi Zadian Arief. I am the Corporate Strategy Planning and Investor Relation Head of Danamon.
I would like to welcome Danamon's Board of Directors and Board of Management, and also President Director of our ADIRA Finance, who have joined from their respective locations. Ladies and gentlemen, before we begin the presentations, let us share a quick video summarizing our journey in 2023. Okay, now I see familiar faces from our analysts already joining us for today. Before we hear the details of PT Bank Danamon Indonesia Tbk's financial results for full year 2023, I would like to invite Bapak Daisuke Ejima, as our President Director to deliver his remarks highlighting the progress of our key strategies. Pak Ejima, the screen is yours.
Thank you, Yogi. Next page, please. First of all, thank you all investors and analysts for joining this session today. We truly appreciate you spending time for Bank Danamon. Detailed financial numbers will be covered by CFO after me. I would like to focus on our key development and journey of Bank Danamon in 2023. First is our continuous development in digital banking. On left-hand side, the development journey on our mobile banking applications of D-Bank PRO for individual customers are the most since its launch in 2021. Through our agile method, D-Bank PRO launched 22 new features in 2023 only to meet our customers' various financial needs, such as multi-currency account and FX library, various management product of mutual fund and bond, access to consumer loans like credit card and ADIRA auto loans better way, and bank assurance, et cetera.
Hence, compared to previous year, we were able to increase its number of users over 100%, and transaction volume and value around +30%. Similarly, on the right-hand side, we are continuously building our digital solutions to support our business customers. Since the full migration to our new platform of Danamon Cash Connect, DCC, we have been focusing on development of cash management and financial supply chain capabilities. Lastly, digital development continuously to build with connectivity by collaborating with leading digital players in the market. This is to create the value chain ecosystem, and as reflected at the bottom of this page, the transaction growth has been promising and benefiting both our individual and business customers. Next page, please. This page is on how we have been redefining our customer's experience through our next generation branch concept.
This new concept is not merely about the look of interior and exterior, but it is to deliver a holistic upscale customer experience, including communities with seamless interactions and use of savvy digital technology and central financial advisory services. We kicked off this initiative with two branches upgraded in late 2022, and widespread to additional 51 branches across 18 cities in 2023.
As shown on the top box figures, we saw encouraging results from the initial implementation of five branches. These five branches have been in operation under new concept over 9- 12 months. Fresh funding increased by 23%, and new loan disbursement by +11%, which includes loan for SME banking. New customers acquisition has also shown a good progress both in privilege and optimal segment. We are glad that our investment in channels, both in digital and branch network are being positively accepted by our clients.
Next page, please. Since being a part of MUFG family in 2019, we have been consistently building collaboration with MUFG. Since last year, given the fruitful result of past track record, we replicated similar approach in strengthening our synergy ADIRA Finance. since 2020, our synergy deals and loans have grown over 200%. Last year ADIRA Finance saw 10% of its sales deferred from Danamon customers. Such progresses are supported with various collaboration events such as Indonesia International Motor Show, IIMS, which is currently taking place. Our targeted ecosystem approach has been critical for us in expanding our customer reach. Real estate ecosystem is another good example. We focused this real estate ecosystem through Japanese developers in the country. In 2023, last year, we paved tangible milestone deals through prominent Japanese developers.
All in all, we have partnered with 32 projects, which is about 75% of total Japanese developers project in Indonesia. With this good traction, we aim to realize the business impact from this ecosystem in years to come. Back on the automotive ecosystem ADIRA Finance, as shown on the right-hand side, the progress has been mutual. New mass customers from ADIRA referral is bringing long-term opportunities for Danamon. Next page, please. Looking ahead, as we embark the next three-year plan, we will leverage our group capabilities more, not merely a strong banking business between Danamon and MUFG, but with multi-finance area, which in addition ADIRA Finance, now we have Home Credit Indonesia which these handphone and durable goods financing supported by strong digital capabilities and offline sales expertise. I would like to call everybody to put yourselves on mute, please. Thank you.
Subject to regulatory approval, we will have Mandala Finance as our group member, which will ADIRA Finance's presence in Indonesia. As shown in the mid and right part of the slide, our local and digital presence is being complemented by MUFG and partner bank coverage globally and in Southeast Asia region particularly. We will strive to leverage these unique capabilities to grow together with our customers so that Danamon and group members can differentiate us from other peers in the market.
Next page, please. While we will remain focused in building strong foundation for Bank Danamon, in the next three years, our priority shifts to grow as a financial group. We have set next three year priorities, which comprise of strategic theme, including: One, building dominance in targeted ecosystems such as automobile, real estate, education, et cetera. Two, delivering unique MUFG propositions to our customers.
Three, advancing in data analytics and process improvement. In parallel, we continue to focus on foundation building in banking business, which are IT and digital, people, branding, and branch and ATM networks. We believe our strategic directions will optimize our resources and able to preserve our double-digit growth in lending and funding with sustainable profitabilities for the next three years. We commit to our vision in enabling millions to prosper and making tangible contributions to Indonesian economy. Thank you. Now I give the floor to Pak Muljono, Danamon Finance Director, who will share the details of Danamon 2023 financial result. Pak Muljono, please.
Thank you, Pak Ejima, and good afternoon, everyone. Let me share with you the full year result of 2023. I will start with the few key highlights. On the loan, you see that we deliver strong growth in all engines. Our loan and trade finance reached IDR 174.9 trillion, grew by 19% year-on-year. Our consumer loan grew by 41% year-on-year, supported by Japanese ecosystem and completion of Standard Chartered portfolio ADIRA Finance, new financing grew by 31% year-on-year. On the liquidity and fundings, total third-party deposit reached IDR 140.3 trillion, grew by 10% year-on-year, while funding growth shifted to TD due to high interest rate environments. Our granular fundings continue growing and grew by 10% year-on-year.
On the asset quality, our LAR percentage, loan at risk percentage, include COVID restructure still under forbearance, improved by 100 basis point year-on-year to 11.6%. NPL coverage ratio reached 266% from last year of 261%. Our NPL ratio gross improved by 40 basis point to 2.2%. On the profitability, our NIM improved by 20 basis point year-on-year to 8.2% despite the higher interest rate environments. Operating income grew by 7% year-on-year to IDR 18.1 trillion, and our NPAT reached IDR 3.5 trillion, increased by 6% year-on-year. Next. This is the picture of our assets, our balance sheets, basically.
Our total asset control increased by 12% year-on-year, mainly due to loan growth and the growth was quite stable QoQ. The funding grew by 13% year-on-year. This funding, including the borrowing, which mainly coming from ADIRA. As we discussed earlier, our funding growth shifted to TD due to high risk interest rate environments. On the profit and loss, our operating income grew by 7% year-on-year, supported by growth in both interest income and non-interest income. OpEx increased by 8% year-on-year due to the investment commitment in various key area such as IT, infra, digital capabilities, marketing and brandings. CoC in amount increased by 12% year-on-year. However, in percentage, which I will share later, it remain the same at 2.4%, despite a significant increase in loan growth.
With that, our NPAT increased by 6% year-on-year and reached IDR 3.5 trillion. This is the key financial ratio. You see that our NIM year-on-year improved by 20 basis point, mainly supported by better in loan yield and cost of fund management. Compared to last year, our CoC relatively flat at 2.4%. With that, our NIM improved by 20 basis points, and our risk-adjusted margin better by 20 basis points. NPL console grows at 2.2%, improved by 40 basis point compared to last year, and our coverage ratio at 266%, improved significantly compared to last year. Loan at risk, including COVID, at 50%, and our CAR consolidated remains strong at 27.5%. On the funding and liquidity. We continue focusing on granular fundings.
This can be seen from the funding structure on the bottom right tables, where we were able to grow our granular funding by 10% compared to last year. CASA ratio at 52.3%, lower compared to last year due to high interest rate environments, and funding growth 52 TD. We have a healthy liquidity supported by strong LCR and NSFR. This is the structure of our capital. The console CAR at 27.5% and stand-alone at 25.3%, far above the minimum requirement, with almost 100% represent Tier 1 capital. This is the represent the detailed loan compositions. If you refer to the left chart, it remains stable. The loan composition remains stable, and detailed loan growth by business and region refers to the right tables. As we discussed earlier, that consumer growth supported by Japanese ecosystem and completion of Standard Chartered portfolio acquisitions.
This page represent the detailed loan growth, the detailed loan by sector, which is well diversified across economic sector and mainly in the form of the working capital. Loan by sector is on the left table, and the right chart represent the loan by purpose, which mainly represent the working capital loans. This is ADIRA Finance. chart on the left showing ADIRA was able to grow above industry, both in two-wheelers and four-wheelers. Table on the right, top right is showing the new financing year by year. Compared to last year, the new financing grew by 31%, supported by all products. With that, ADIRA loan outstanding grew by 25%. This is showing the stable NIMs trend. The 6% year-on-year on the non-interest income on the right chart.
NPL, as we discussed earlier, that NPL ratio at 2.2%, so improved by 40 basis points compared to last year. Special mention increased by 30 basis points to 8%, or in amount increased about IDR 2.4 trillion year- on- year, mainly coming from ADIRA. This is due to nature of the business here. Despite the strong loan growth, our NPL amount remains stable compared to last year at around IDR 3.5 trillion. And NPL coverage ratio increased from 231% to 266%. Next. This is the last slide on the financial updates.
Cost of credit relatively flat at 2.4%, and LAR amount increased by IDR 1.5 trillion from IDR 17.2 trillion last year to IDR 18.7 trillion. However, LAR as a percentage of total loan improved by 100 basis points from 12.6% last year to 11.6%. Further, our COVID restructure under forbearance improved from IDR 2.9 trillion last year to IDR 1.7 trillion at the end of 2023. With that, I finish my financial updates and pass it to Yogi.
Yes, for sure. Thank you very much, Pak Ejima and Pak Mul, for the presentations. Ladies and gentlemen, now is the time for us to begin the Q&A session. Just to remind, please raise your hand on the MS Teams menu button. I will call your name, then please open your camera and unmute your microphone. Please inform your name and company and to whom the question is addressed to. Or alternatively, you can also write down your questions on the chat menu. Similarly, please also inform your name and company and to whom the question is addressed to. I am sure some of you now already hear our presentations are preparing the questions. While waiting for the incoming of the questions, let's have a look at our aspiration video, Grow with Us and our current event, IIMS 2024.
[Presentation]
Okay. Thank you. On the last video, our IIMS 2024 has just opened last Thursday. I am sure some of our investors and analysts already experienced the event directly. Thank you very much for your support, and we will be very glad to welcome you at the event until at the end of this week. Now, I see some questions already coming in. Let me just read the first two, which is about ADIRA. I am sure Pak Made are more than happy to cover this one. Let me read it. This is from Irvan. Thank you, Irvan from Pangolin Investment for the questions, as well as from Owen from CGS-CIMB Securities. First one is, what caused the gross NPL for ADIRA to increase, and what is the expectation for full year 2024? I believe this is referring to the target on guidance for the loan growth.
Pak Made, if you do not mind to cover these two questions.
Yeah. Thank you, Yogi. So what happened is in starting 2023, there will be normalization on underwriting. Having said that, our level of NPL is still below pre-COVID level. So I think after COVID, there is a lot of restructuring. We deal with that and then tightening the underwriting. After that, following the recovery of the auto, we normalize the underwriting standard. So we are having some increase, normalized level of NPL. With regard to the growth target, we expect this year we will grow around 12%-14% in term of new financing.
Okay. Thank you, Pak Made. While you are on screen, there is a follow-up questions from Vinchel. Also, thank you, Vinchel from Pangolin Investment. Follow-up question is about what is the plan with Home Credit and Mandala and ADIRA. Any plan for cross-selling, and what is the growth target in the non-automotive segment in the mid to long term, Pak Made?
Yeah. Thank you for the question. I think the first one is, as part of the growth, one of the strength of the growth that we want to do in going forward is basically collaboration among the member of the MUFG Group, including Home Credit and Mandala.
Yes, we will collaborate to basically cross-sell, referral, a lot of business synergy that we want to extract from collaboration within the group. The second question, Yogi, what is? Can you say that second question?
Sure. The second question is, what is the plan for cross-selling, and what is the growth target in non-automotive segment in the mid to long-term part?
Yeah. I think non-auto right now is represent around 20% of the product portfolio ADIRA Finance, primarily in the form of multipurpose loan. We want to continue to increase the sale of the multipurpose loan to around 25%-30%.
Okay. Thank you. Very clear, Pak Made. And I believe this growth is also supported with potential collaboration going forward with Home Credit and Mandala, I believe. Yeah?
Yes. Sure.
Okay. Moving on, there is also questions. Thank you, Darren, from BNI Sekuritas. Several questions here. Let me just read through one by one. I believe for these questions, Pak Mul will be covering to respond. The first one is, what is the stable CoC level, long term, short term, for Danamon, as well as what is the level of LAR and NPL coverage are we looking at the long run?
Sorry, Yogi, I think I should probably be answering that.
Yes, this is for Pak Dadi. Yeah.
Yeah.
Pak Dadi, I think there are several questions here, including also the write-off for Q4 in 2023, as well as the last one later on with Pak Mul on the cost of fund outlook for first half 2024 and second half for 2024. Pak Dadi, I think you can cover for the first three questions, if you don't mind.
Sure. Yeah. Okay. Yeah. I think on the first question, regarding CoC, if you look at the last 15 years, during normal years, and what I mean with normal years are most of the years during the last 15 years, except for let's say, 2020, 2021, which were affected significantly by the pandemic. But Danamon's normal CoC would range anywhere between 2.5%-3%. Actually, 2.6%-3%. So last year, we were at 2.4%, which was definitely below the normal range, right? I think what we can see in the shorter term, our CoC would be closer to the lower end of the range. So would be closer to 2.5%, rather than the 3% level. Then the next question is on the NPL, right? I think there's a question on NPL.
Yeah. It's about LAR and NPL coverage. Yeah.
On NPL, I think probably a lot of focus tend to be given on NPL. What I can say is that, again, NPL-wise, Danamon has normally ranged anywhere between 2.7%-3% in normal years. I would say, in the shorter term, we are actually now returning to our normal trend post-pandemic, along with our expansion of risk appetite, et cetera. What you've seen, with the increase of ENR, et cetera. So we are moving back to the normal years. But I strongly believe that we will be closer to, again, the lower end of the range. So our NPL would be anywhere between 2.6%-2.8%, I would say, in the shorter term. In terms of LAR, we have, in a way, reached the bottom range of our LAR, which is at 12%.
I believe we will be hovering at 12%-13% in the near term. The next question is on the write-off in the fourth quarter. I do not think I have the data at the moment, but I can return again, right, Yogi? Give me a few minutes, and I will return again for the numbers of write-off in the fourth quarter. Yes.
Sure. Thank you, Pak Dadi.
Thank you.
While waiting for that, Pak Mul, can you cover on the next question regarding the cost of fund?
Yes. I will do that. On the cost of fund, basically, if you are talking cost of fund, we are talking about Danamon, because ADIRA has their own borrowing, and also bonds. On Danamon, we see that the cost of fund will be around 3.5% for full year. This is also based on a few assumptions. First, I think is in line with the projection on Fed rates as well as BI rates. I think we assume that from the various analysis that BI rate will be lower in the second half, starting from the second half. This is also an assumption that we are able to control the inflations and also the business environments.
Yes.
Thank you, Pak Mul. Let me cover the next questions on the chat box. Before I move on, there is one raised hand. Just very quickly, thank you, Ramanto from Stockbit. First question is around cost of credit. I think it is already covered earlier from Pak Dadi. The next question is, with the strategic direction of 2024, 2026 of double-digit growth, any guidance on the loan growth and LDR target for 2024? What segments will be the drivers? I believe Pak Mul and Pak Ejima can cover this one. You are still on mute, Pak Mul.
I think I can cover the loan growth.
Sure.
I think the loan growth, we are talking about the Of course, we will follow the guidance from the OJK and central banks. Basically, we are looking at the higher single digits or lower double digits. We are talking about ranging between 9% to probably 10% loan growth. It also depends to the business environment in the country, of course. On the second question, basically on the LDR. LDR, we are trying to maximize our fundings and make sure that those really support our business. In term of the LDR, we are talking about ranging between around 95%, I guess. Yeah, between 95% to 97%. Yeah.
Okay. Thank you, Pak Mul.
Okay. Yogi, I have the data on write-offs if you.
Yes, sure, Pak Dadi. Please.
Yeah. Write-offs in the fourth quarter of 2023 was at IDR 8.7 trillion.
Okay. Thank you, Pak Dadi.
Thank you.
I believe that answers the questions. Just to supplement very quickly.
Oh, Yogi, sorry.
Yes, Pak Ejima, you want to supplement on the strategy part? Yes.
With regard to the contribution of Bank Danamon to Indonesian economy, we still want to keep this double-digit growth in loan and a slightly larger percentage increase in double digit in funding side. Last year, as I explained, we had 19%+ , which is exceptionally good, and this came from all four core segments, not necessarily the large corporate, but SME, consumer funding and ADIRA, all four engines grew. Whether we can continue this level of growth, it is probably not sustainable, as we all know. That is why the number will get lower in this year. But still, we would like to shoot for low double digit, close to 10% level in this year. Thank you.
Thank you, Pak Ejima. Let me move on to the people that is raising hands. Rajesh from Doric Capital. If you don't mind, you can open your camera and raise your question by opening your mic.
Hi. Thanks, Yogi. I am unable to open my camera right now. I am outside the office. Happy to. Congratulations, first of all, on very strong operating performance. We've been investors in Danamon since 2006, for a long time, and then we became investors again about 15 months ago. We believe in the long-term strategy and growth of Danamon, but there are a few questions that I would like to clarify.
To begin, one regarding the answer to an earlier question on the stable NPL level, I wanted to clarify. If you look at the history of Danamon, there was a lot of high-risk segments that were a big portion of our asset book. We had microfinance loans, and we had a lot of SME and medium corporate exposure. But ever since MUFG takeover, our loan mix has changed. It's become much more lower risk. We have a lot more exposure to mortgage.
We have exposure to larger corporates, and even within consumer, outside of mortgage, it's a lower risk mix. Let's assume that ADIRA's mix is similar. Even I believe ADIRA, some loans are riskier, some loans are less risky, but average is roughly the same. For Danamon, definitely the loan mix is lower in terms of risk. That being the case, why would our NPL in the medium term not be much lower than history rather than being towards the low end of history? If you could please explain that. Secondly, the question was regarding what is the target level for NPL and LAR coverage. Again, if earlier a lot of our mix was, say, towards microfinance, then if that loan is at risk, then there is a recovery of that loan is going to be very low.
So it makes a lot of sense to have high LAR coverage. But if we have a mortgage loan, then the recovery is going to be much higher. Even if it's NPL, you're going to recover maybe 60%. Therefore, the loan at risk coverage need not be as high as history. So if you could comment on both these issues.
Sure. Thank you, Rajesh. Yes, Pak Dadi, if you do not mind, I think a couple of questions-
Yeah.
-direct to you on the asset quality.
Yeah, sure. Yeah, actually, if we looked at, again, the NPL ratio historically in the last 15 years, it was actually, in most years, normal years here, I am talking about, it was very much close to 3%, actually. I was actually saying 2.7%- 2.9%, but I strongly believe that in most years, it was closer to 3%. At some times, it goes a bit beyond 3%, right? What we are aiming, what we are projecting, basically, in the near term, yeah, I do acknowledge that there is some of shifting mix, right, within Danamon itself. That is actually the reason why we believe that we should be able to reach NPL ratio of anywhere between 2.6%- 2.8%. That will be our new normal, I would say, as long as our portfolio mix remains the way it is at the moment.
We need to remember also that despite the only difference, right, that we probably see in the portfolio mix going forward is the absence of the microfinancing. Microfinancing was what Danamon had in the past, right? You mentioned, Rajesh, about the higher risk segment that we had. Microfinancing was basically the only difference. The other segments, going forward, it should basically be very much the same with whatever we have. We will be growing our SME again and commercial banking. Mortgage, yes, we are growing mortgage. Actually, if we looked at, for example, a lot of the analytical data on mortgage, actually, at the level of segments in mortgage that we are exposed to, the NPL ratio, generally, among banks, actually run above 2.5%. Although you are right, that on the CoC itself, the CoC is generally lower.
And recovery, you are correct, the recovery can be higher. But you have to keep in mind that the turnover, the recovery time is actually much longer in mortgage than in segments like ADIRA, for example. This relates to what I will try to explain on the NPL coverage, which we strongly believe that we will prefer to have an NPL coverage of above 200%. This is also part of our strategy to be more prudent rather than, since you have been covering us for more than 15 years, right? For 18 years by now.
So you are referring to our usual NPL coverage in the past of about 120% only. But we strongly believe at the moment, actually with the bigger exposures in commercial banking sector, in commercial banking segment, we believe that we should have coverage above 200%, actually. That will be a more prudent approach. That is my take on your question.
Thanks for your detailed and patient explanation. I am all for conservative banking and for conservative guidance. I think that is perfect. That is what bankers are expected to be. It is much better to be conservative than regret later. But I just wanted to make one observation, that it is not just about being conservative, because there is a real cost to how we think about these segments. Because if we assume, for instance, that our NPL in mortgage is going to be 2.5%, let us assume that is what we really believe, then it becomes very difficult to grow that segment. Because you will be then either targeting very high-risk mortgages, because that is where you can get the yield. Or in better quality mortgages, if you still assume it is 2.5% NPL, you will not be doing that business.
If we want to grow our book, we have to also have realistic estimates of the NPLs, and risk, and target the business accordingly. Otherwise, we will not be able to grow. Or we end up growing in the wrong segment. I know you cannot answer this question right now, but I would strongly suggest we look at this on a segment by segment basis, and even within the segment, look at it in a much more granular manner. Because if you look at the mortgage NPL for BCA, it is very different from, say, the government bank, which does mortgages, because they are targeting very different segments. The government bank has 5% NPL in mortgage. BCA has 1% or less. So average is 2.5. That does not mean mortgage is 2.5.
I know you know this, but I just want to be clear, as an investor and shareholder in the business, that we are not giving up profitable good growth because we are too conservative about the NPL assumption, because that can hurt us. That brings me to the second issue that I want to talk about. I truly believe you've done a lot of good things over the last three years in terms of improving your funding, improving on the asset side, on the system side. But end of the day, we are still setting our targets too low. Because you're setting your target for, say, lower double-digit growth in loans for next year, and I guess if you look at the nominal GDP growth in Indonesia, that's likely to be low double digit, or somewhere there.
We don't know exactly where it'll be, but say roughly in that range. So essentially to grow at nominal GDP is the minimum that we should do. But if we are gaining market share in terms of doing good things for our customers, and if we're serving the Indonesian economy, and we are doing better than our competition in serving the Indonesian economy, we should be targeting to grow at least at 1.5 x nominal GDP. Therefore, if we're growing 19%, like we did this year from a relatively low base, that's not abnormal for us to do that or sustain it for a period of time. Ultimately, it's about saying, are we getting enough good quality customers to grow rather than any particular number, 12% or 19%?
That would be my hope, that Danamon can actually grow more than 15% on a consistent basis, assuming a nominal GDP growth of 10% in Indonesia. Also on the ROE, currently our ROE is whatever, 7%, 8%. That's just too low. Ultimately, a ROA of less than 2% and ROE of 8% is unacceptable to an investor. We hope that those numbers, ROA move up over 3%, the ROE move up over 15%, are targets that you have. Could you please explain in your strategic vision, how does this fit in with our thinking?
Noted. Thank you, Rajesh, for the big expectations. Yeah, I think the points are well taken. Yes, first few years, we focused more on the size than profit or profitabilities, as you said. There's also an approach that we are also aware of that other banks are taking more on a portfolio basis to strengthen some customer segment, but weakening the other segment, et cetera. We are also having the same concept next three years. I didn't explain, elaborate more in my presentation, but that's what we would like to target in ecosystems.
At our size, we are not able to cover everything. So rather, we want to battle in the field that we have higher possibilities to win. Those are what we call ecosystems. Automobile, we have been working very hard along with ADIRA, and these are more or less getting a prominent position in this ecosystem.
We are also targeting real estate. As I mentioned, we want to expand it to education and Hajj in travel, et cetera. Those areas, we want to grow. Whether we can continue the high double-digit percentage as you are indicating, we want to, but for us, keeping the more sustainable profitability is equally or getting more imminent and important at this juncture. We also would like to consider in balance in terms of portfolio, where to grow and where to get more profitabilities, et cetera.
At the end, we are a private company, listed company, and we would like to meet the investors, analysts, the profitability expectation. That is for sure our first priority. At the same time, considering the presence in Indonesia, of Danamon in the market, we also want to support the community. We also want to support the growth of this country. Where we can balance these two slightly different angles, that constantly we have been discussing, and your points are well taken. Thank you so much.
Thank you, Pak Ejima. Rajesh, I am sure, I think we have met last year. I believe you will have a plan to visit Jakarta this year. We will have next meeting, I believe, and we will get to have that. If you do not mind, conscious of time, there is an additional question from Mandiri Sekuritas team. I believe, Kresna, you were raising your hand earlier. Do you want to open your camera or should I just read your questions?
Thanks, Yogi. I think we will be happy if we can address the questions on the chat line. I really appreciate the opportunity, if we can discuss the questions there. Thank you very much for Yogi.
Sure, Kresna. Let me read from your team first, from Bobi. The first question is, could you share about Japanese company stance on Indonesia? Any increase in commitment, investment, demand, or loans in particular sector? How do they think of us during the election year right now and next three to five years? Pak Ejima or Pak Nao, do you want to cover this one?
Okay. Let me answer, and maybe Ejima-san may want to add his color later on. Okay, the Japanese, the company stance on Indonesia, I think remain optimistic or confident, especially on the long-term basis. What we do see the stable demand for loan is in the three industries, real estate, food and beverage, and healthcare. Those three segments, we see some stable loan demand from the Japanese company. On top of that, they are looking for local partners to support their business expansion in Indonesia. We are working on lending to them, as well as finding the local partner in Indonesia to support their business expansion here in Indonesia. The last part of the question, I think momentum will remain unchanged, even we really hope the Japanese companies, the commitment or investment or demand for loan in Indonesia will continue for the next three to five years.
That's all. Maybe Ejima-san, you may want to add your color.
Thank you, Naoki. I agree with your point. From Japanese investors or company standpoint, looking at current geopolitics in the globe, Chinese business are getting tougher and tougher, particularly capturing trade business between China and U.S., et cetera. Naturally, their directions or attentions are more coming to Southeast Asia and India. That's macro sentiment. Also, looking at the potential or depth in the market, among all possible countries, Indonesia has the largest potential, needless to say. I expect more attention to come from Japan going forward. The challenge is whether political stability as well as the fiscal stability of Indonesian government will continue or not. We hope that will continue, but that can be as some caveat for Japanese corporate, whether they increase the investment more in this country or not.
But overall, as Pak Naoki was explaining, generally, I'm hearing the positive sentiment even after the election. Thank you.
Thank you, Pak Naoki, Pak Ejima. Last couple of questions. I believe this is directed to Pak Mul. The first one is about asset yield, which essentially increased quite meaningfully in 2023. Question is, should we expect the trend to continue in 2024, and what will be the driver? Also, I think how much is the typical loan yield in each of our business pillars, Pak Mul?
Okay, thank you for the question, Yogi. If you look at the Danamon profiles, look at our four major engine, basically, it is coming from the EB ADIRA Finance, then SME and consumer. We were able to improve our yield not only because of the First, I think because of the strong growth in ADIRA, as well, and in EB. And other than that, we also improve our yield in the treasury asset, which is like government bonds. Going forward, I think it will depend whether we are able to grow in the asset that we would like to, which is like, for example, like ADIRA, EB, as well as in various asset that we have, like treasury assets. Like mortgage, I think as you might aware that for the first few years, due to nature of the business, we have fixed rates.
But over times, when become floating will benefiting us. But it takes times before it become a floatings. That I hope I address the questions, Yogi.
Okay, sure. Thank you, Pak Mul.
Maybe , I can just add-
Yes, please.
-a little bit about yield.
From time to time and becoming quite often, we also link the loan yield with the ancillary business that clients are giving us. At the current market, sometimes loan yield is getting more competitive, but we also look at the total profitability return. We look at the, for example, the Forex volume and so on and so forth. That is basically the overall return for us in addition to the yield itself. Thanks.
Thank you, Pak Mul and Pak Thomas. Bobi, later on the data on each segment, we will rethink touch on that data. Last questions for Pak Mul. I think this is about CASA dynamics in 2023. I think the comment is on year-on-year basis, CASA declined 10%, but on QoQ, it gained 9%. The question is, what drove the fluctuations in 2023? How much can Danamon's existing digital banking innovation push for CASA base improvement in 2024? Pak Mul-
Thank you, Yogi, for the questions.
-maybe later on can be supplemented by Pak Hafiz as well and Pak Honggo on the digital side. Thank you.
Maybe I can start first. Thank you for the question. Yes, I think in term of CASA, we know that for some banks willing to pay high cost CASA. What we have in our strategy, basically, we focus on growing the sustainable CASA instead of competing the high cost CASA. If you have heard the comment from the explanation from Pak Ejima that we have invested in many things since MUFG became the main shareholder of Bank Danamon. We invested in the IT infrastructure, digital capabilities, people, and brandings. On the digital capabilities, we improved our channels. Digital channels, which is like D-Bank PRO as well as Danamon Cash Connect. In addition to that, we also improved our physical appearance of the brands through the bank's transformations. With that, we hope that we can engage more with the customer.
We hope that customers are able to transact using our platform. We have seen the good early traction, both in the digital transaction as well as in the brandings, in the transaction through branding. We also involve in many events to promote the business expansion and customer acquisitions, which is like currently we have the IIMS 2023 in automotive, which also actively sponsoring DXPO, Pride Story. We hope that for the rest of the year, we will continue our engagement with the customer. Despite that our CASA lower compared to last year, our granular fundings, which consists of CASA and TD regular, increased by 10%. You are asking about what happened in the last quarter.
In the last quarter of the year, basically what we try to because the intense competition in the market on the fundings, we also try to test our relationships. What happened, we try to test whether the customer really have relationship with us. By increasing our pricing a bit, then test that we got a volume. Through that, we believe that relationship with customer is always there. The reason we do not do it like other bank, we do not want to compete in the high cost CASA. Thank you, Yogi. I hope I addressed the question.
Thank you, Pak Mul. Well answered. I think that is the last question we have for today. Ladies and gentlemen, the respective investors and analysts, once again, thank you for taking part in the PT Bank Danamon Indonesia Tbk's financial result for full year 2023. For any further interest and questions, which I believe you already have, and we will continue having one-on-one meetings. Also, please do not hesitate to reach us through our investor relations mailbox at investor.relations@danamon.co.id. See you in the next Danamon's corporate event. Thank you and have a good day. Bye everyone.
Bye.
Thank you.
Thank you.