316 Jur nal EMBA Vol. 1 No. 4 Dese mber 2013, Hal . 316- 323
ANALYSI S OF FI NANCI AL PERF OR MANCE PRE AND POST I NI TI AL PUBLI C OFFERI NG (I PO) AT BANK CENTRAL ASI A TBK.
by:
Wi l hel m A. A. Weti k
Facult y of Econo mi cs and Busi ness,
Int er nati onal Busi ness Admi ni strati on (I BA) Pr ogram Uni versit y of Sa m Rat ul angi Manado
e mail: vweti k @g mail. co m
ABSTRACT
Several banks t ook a poli cy t o go publi c or i niti at e i nitial publi c offeri ng poli cy (I PO) i n or der t o gai n access t o capit al. Thi s capital sur pl us i s ver y usef ul for banks expansi on t o i ncrease t heir perf or mance and support t heir operati on and l o wer t he ri sk of goi ng bankr upt. I n its pr ocess, banks must pr epare pr ospect us t o fulfil t he r equire ment befor e goi ng publi c. Pr ospectus cont ai ns accounti ng i nfor mati on and non- account i ng i nf or mati on fr o m co mpani es who want t o go publi c. These ki nds of i nf or mati on ar e ver y usef ul t o anal yze t he soundness of t he bank and hel p bank t o gai n ne w i nvest ors and publi c confi dence. The obj ecti ve of t hi s r esearch is t o co mpare pr e and post of I PO at Bank Central Asi a Tbk. by anal yzi ng fi nancial perf or mance r ati os t hr ough CAMEL r ati os. Theori es supporti ng t hi s r esearch are fi nanci al manage ment and fi nanci al st at e ment. The popul ati on i s fi nanci al dat a wi t h sa mpl e of dat a i s year 1998 t o 2002 wi t h Ma y, 2000 as I PO year. Thi s r esearch uses t wo years bef ore I PO and t wo years aft er I PO and i s anal yzed wi t h paired sa mpl e anal ysi s. Res ult and concl usi on ar e t here i s a si gnifi cant difference of co mpany fi nanci al perfor mance pr e and post I PO and t hat IP O of Bank Central Asi a, Tbk. gi ves a si gnifi cant difference on co mpany fi nanci al perfor mance.
Key words: fi nanci al perf ormance, pre i po, post i po, financi al rati o, pai red sampl e anal ysis I NTRODUCTI ON
Research Background
Indonesi an econo my was hit by econo mi c cri sis t hat affect ed fi nanci al sect or i ncluded banki ng i ndustr y i n 1997- 1998. Econo mi c crisis has di rectl y affect ed banki ng perf or mance. Thi s sit uati on f orced central bank of Indonesi a, i n t hi s case I ndonesi an Bank, t o s uspend 16 co mmer ci al banks on Nove mber 1, 1997. Central bank of Indonesi a al so li qui dat ed 38 banks on Mar ch 13, 1999 ( Nur azi and Evans, 2005). Accor di ng t o Hadad ( 1999), fi ve maj or f act ors t hat can descri be t he weaknesses of banki ng i ndustry syst e m and gi ve i mpact t o t he 1997-1998 econo mi c crisis i n I ndonesi a are: ( 1) t he guarant ee fr o m t he central bank t hat banks s houl d not be all owe d t o f ail t o pr event f ail ure syst e mi c ri sk l ed t he bank owners and manage ment t o less caut i on i n gi vi ng credi ts t o hi gh ri sk sect ors; ( 2) I neffecti ve super vi si on by t he central bank l ed banks t o i gnore pr ecauti onar y pri ncipl e runni ng t heir operati on; (3) I ncreasi ng ri sk of non- perf or mi ng l oans of co mmer ci al banks caused by concentrat ed si zeabl e l oans t o i ndi vi dual s or busi ness gr oup; ( 4) Lo w s kills i n banki ng manage ment l ed t o i ncreasi ng of ri sk and weakeni ng i n pr oducti ve asset qualit y and ( 5) l ow accuracy i n t he anal ysi s of banks fi nanci al perfor mance caused by l ack of transparent i nfor mati on on bank conditi on.
Cent ral bank of I ndonesi a i ssued a poli cy t o r ecapit ali ze banki ng i ndustry t hr ough its capit al str uct ure i n 1999. Thi s poli cy was i nt ended t o i ncrease banks perfor mance t o maxi mi ze t heir operati on. Central bank of Indonesi a al so i ssued a policy t o guarant ee t he li abilities of co mmer ci al banks. Thi s poli cy was i nt ended t o i ncrease publi c confi dence t o st abili ze fi nanci al sector i n t hi s case banki ng i ndustry. I n bank r ecapit ali zati on poli cy, banks operat ed i n I ndonesi a except f or f orei gn banks and mi xed banks have t o f oll ow t he r equire ment of µILW DQG SU RSHU W HVW¶ ZKL FK REOL JDW H EDQN¶V VKDUHKRO GHUV RU QH ZL QYHVW RUV W R L QFUHDVH W KHLU FDSLW DO DV PXFK DV 20 % mi ni mu m t o r each st andar d capit al adequacy r ati o as much as 4 %. I n ot her wor ds, centr al bank of ,QGRQHVL D L QFUHDVHV EDQN¶V FDSLW DO DGHTXDF\ W R PL QL PL]H W KH UL VN RI EDQNV JRHV bankr upt. Several banks t ook a poli cy t o go publi c or i nitiat e i niti al publi c offeri ng poli cy (I PO) i n or der t o gai n access t o capit al. Thi s capit al
Jur nal EMBA 317 Vol . 1 No. 4 Dese mber 2013, Hal . 316- 323
sur pl us i s ver y usef ul f or banks expansi on t o i ncrease t heir perf or mance and s upport t heir operati on and l ower t he ri sk of goi ng bankr upt. In its pr ocess, banks must pr epare pr ospect us1 t o f ulfil t he r equire ment bef ore goi ng publi c. Pr ospect us cont ai ns accounti ng i nf or mati on and non- accounti ng i nf or mation fr o m co mpani es who want t o go publi c. These ki nds of i nf or mati on ar e ver y useful t o anal yze t he s oundness of t he bank and hel p t he bank t o gai n ne w i nvest ors and publi c confi dence.
Bank Central Asi a Tbk. i s one of I ndonesi a banks t hat go publi c si nce Ma y 31, 2000. Ther e ar e s o me changes happened aft er Bank Central Asi a Tbk. go publi c. When t he bank i s doi ng I PO or i niti al publi c offeri ng or goes publi c, it directl y i mpact s fi nanci al gr owt h of t he bank it self. Thi s fi nanci al gr owt h can be measured t hr ough bank perf or mance and it can be assessed t hr ough bank' s fi nanci al report. Based on fi nanci al report, t hi s research cal cul at es nu mber of r ati o t o be t he EDVL F I RU EDQN¶V SHUI RU PDQFH DSSU DLVDO 7KH REM HFWL YH RI W KL V U DWi o anal ysis i s t o eval uat e t he strengt h and weaknesses of t he bank and al so t o anal yze fi nanci al perf or mance bef ore and aft er t he bank go public.
Most of t he st udi es about i niti al publi c offeri ng are concentrati ng on manufact ure co mpani es and banki ng i ndustri es t hat are li st ed i n I ndonesi an St ock Exchange peri odi cally, alt hough little have been docu ment ed and st udi ed about one parti cul ar co mpany or bank. Theref ore, t hi s r eason moti vat es t he r esearcher t o make a f urt her r esearch about I PO (I niti al Publi c Off eri ng) especi all y by i ndentifyi ng t he fi nanci al r ati os t hr ough CAMEL r ati os. Accor di ng t o Nur azi and Evans ( 2005), CAMEL r ati os ar e st atisti call y si gnifi cant t o eval uat e fi nanci al perf or mance and beco me an effective t ool t o measure possi ble bank f ail ure. Thi s i s r el evant wi t h t he poli cy set by central bank of I ndonesi a about measuri ng t he soundness of a bank usi ng CAMEL r at i os ( Regul ati on of Bank I ndonesi a No. 6/ 10/ PBI/ 2004). Fi nall y, fi nanci al perf orma nce r ati os ( CAMEL) wi ll measure t he I PO by co mpar i ng pre and post Initi al Publ ic Offeri ng of Bank Central Asi a, Tbk.
Research Obj ecti ve
Thi s r esearch wi ll co mpare pr e and post of I PO on Bank Central Asi a, Tbk. by anal yzi ng fi nanci al perfor mance r ati os t hr ough CAMEL r ati os usi ng CAR ( Capit al Adequacy Rati o), NPL r ati o ( Non Perf or mi ng Loan), ROA ( Ret ur n on Asset), ROE ( Ret ur n on Equit y), Oper ati ng Expense t o Oper ati ng I nco me, NI M r ati o ( Net Int erest Mar gi n), and LDR ( Loan t o Deposit Ratio).
THEORETI CAL FRAME WORK
Theori es
Fi nanci al Manage me nt
Fi nanci al manage ment i s a concer n of mai nt enance and cr eati on of econo mi c val ue or wealt h. As s uch wi ll deal wit h fi nanci al decisi on s uch as when t o i ntroduce a ne w pr oduct, when t o i nvest a ne w asset, when t o repl ace exi sti ng asset, when t o borr ow fr o m banks, when t o i ssue st ocks or bonds, when t o ext end cr edit t o a cust o mer, and how much cash t o mai nt ai n ( Keo wn, 2005 : 4).
Fi nanci al St ate me nt
Ther e are t hree basi c of financi al st at e ment: bal ance sheet; i nco me st at e ment and cash fl ow st at e ment ( Loner gan, 1995). A fi nanci al st at e ment ( or fi nanci al r eport) i s a f or mal r ecor d of t he fi nanci al acti viti es of a busi ness, person, or ot her entit y. For a busi ness ent er prise, all t he r el evant fi nancial i nf or mati on pr esent ed i n a struct ured manner and i n a f or m easy t o underst and, i s call ed t he fi nanci al st at eme nt s. They t ypi call y i ncl ude four basi c fi nanci al st at e ment s, acco mpani ed by a ma nage ment di scussi on and anal ysi s: St at e ment of Fi nanci al Positi on: al so r eferred t o as a bal ance sheet, report s on a co mpany' s asset, li abilities, and o wnershi p equit y at a gi ven poi nt i n ti me; St at e ment of Co mpr ehensi ve I ncome: al so r eferred t o as Pr ofit and Loss st at e ment, reports on a co mpany' s i nco me, expenses, and pr ofits over a peri od of ti me ( Keo wn, 2005 : 49).
1
Pr ospect us is one of t he require ment s set by t he Indonesi a Mar ket Super vi sor y Agency (BAPEP AM) t o co mpani es who are goi ng publi c.
318 Jur nal EMBA Vol. 1 No. 4 Dese mber 2013, Hal . 316- 323 CA MEL Rati o
CAMEL rati ng syst e m can be descri bed as foll ows:
Capital: Capital Adequacy Rati o ( CAR). Capital adequacy rati o is t he rati o t hat det er mines t he capacit y of t he bank i n t er ms of meeti ng t he ti me li abiliti es and ot her ri sks such as credit ri sk, operati onal ri sk, et c. ( Rose and Hudgi ns, 2008 : 475).
Capit al Adequacy Rati o can be for mul at ed mat he maticall y as foll ows:
CAR = Own Capit al
Risk Wei ght ed Asset
Assets: Non- Perfor ming Loan ( NPL). Non Perfor ming Loan i s defi ned as t he risk associated wit h t he possi bilit y of f ail ure t o pay it s obli gati ons or ri sk client s wher e debt or cannot repay t heir debt s ( Rose and Hudgi ns, 2008 : 207). The for mul a used t o measure t he Non Perf or mi ng Loan is as foll ows:
Non Perf or mi ng Loan = Cr edit
Tot al Loan Coll ect abilit y
Ma nage ment: Net I nterest Mar gi n ( NI M). Net i nterest mar gi n ( NI M) i s a measure of t he difference bet ween t he i nt erest i nco me generated by banks or ot her fi nanci al i nstit uti ons and t he a mount of i nt erest pai d out t o t heir l enders (f or exa mpl e, deposits), rel ati ve t o t he a mount of t heir (i nt erest-ear ni ng) asset ( Rose and Hudgi ns, 2008 : 215). The for mul a t o measure Net Int erest Mar gi n Rati o is:
Net Int erest Mar gi n = Net Int erest Inco me Aver age Ear ni ng Asset
Ear ni ngs: Ret urn on Asset ( ROA), Ret urn on Equit y (ROE), and Operating Expenses t o Operati ng I ncome ( OEOI). The r et ur n on asset ( ROA) percent age sho ws ho w pr ofit abl e a co mpany' s asset are i n gener ati ng revenue. ROE i s equal t o a fiscal year' s net i nco me ( after preferred st ock di vi dends but bef ore co mmon st ock di vi dends) di vi ded by t ot al equit y ( excl udi ng pr eferred s hares), expressed as a percent age. Oper ati ng cost s i s t he cost i ncurred by t he bank i n or der t o r un it s mai n busi ness acti vit y such as i nt erest cost s, mar keti ng cost s, labor cost s and ot her operati ng expenses. Operati ng i nco me i s t he bank' s mai n operati ng r evenue t hat i s t he revenue ear ned fr o m t he place ment of f unds i n t he f or m of l oans and ot her operati ng i nco me ( Rose and Hudgi ns, 2008 : 167- 168). ROA, ROE, and OEOI can be co mput ed as foll ows:
ROA = Net Inco me
Tot al Asset s
ROE = Net Inco me
Tot al Equit y
Operati ng Expenses t o Operati ng Inco me = Tot al Operati ng Expenses Tot al Operati ng Inco me
Li qui dit y: Loan t o Deposit Rati o ( LDR). LDR r ati o is used t o det er mine nu mber of t he a mount of l oans t hat gi ven by t he bank versus t he a mount of f unds r ecei ved by t he bank fr o m t he deposit ors ( Rose and Hudgi ns, 2008 : 363). Loan t o Deposit Rati o can be for mul at ed mat he mati call y as foll ows
LDR = Tot al Out st andi ng Cr edit Loan Coll ect abilit y
Jur nal EMBA 319 Vol . 1 No. 4 Dese mber 2013, Hal . 316- 323
Previ ous Research
Nur azi and Evans ( 2005) found t hat CAMEL r ati os whi ch consi st of CAR ( capit al adequacy r ati o), RORA ( assets qualit y), ROA ( manage ment), OEOI ( earni ngs), CBTD (li qui dit y), and LGBS ( bank si ze) are ver y usef ul t o i dentify, expl ai n, and sol ve bank f ail ure. Hasan and Wai s man ( 2010) f ound t hat Israeli co mpani es whi ch JR SXEOL F DUH O HVV ZHOO NQRZQ W R 8QLW HG 6W DW H¶V L QYHVWRUV DQG SRVVL EO \ I DFH KL JK H[SHQGLW XUH L QW KH I XW XUH U DW KHU t han ot her f orei gn co mpanies t hat list ed t heir securities i n Unit ed St at es st ock exchange. Br au et al. ( 2003) found t hat t here are f our mai n f act ors t hat i nfl uence t he choi ce bet ween an i niti al publi c offeri ng and a t akeover by a publi cl y t raded acquirer whi ch are i ndustry, mar ket -ti ming, deal-VSHFL ¿F DQG W R D O HVVHU GHJUHH GH PDQG I RU funds. Sang mi ( 2010) f ound t hat t he anal yses of fi nanci al perfor mance whi ch consist of fi ve secti ons: capit al adequacy anal ysis, asset qualit y anal ysis, manage ment capabilit y anal ysis, ear ni ngs anal ysis and li qui dit y anal ysis are ver y i mport ant for deposit ors and sharehol ders t o measure t he soundness of bot h banks.
Fi gure 1. Concept ual Frame work
Research Hypot hesi s
Hypot hesi s i s an esti mat e or a r eference t hat f or mul at ed and accept ed f or a whil e t hat coul d expl ai n t he obser ved fact s or conditi ons and used as gui de for further st eps ( Good and Scat es, 1954)
The hypot heses of t his research are:
H0 : There is no si gnifi cant difference of co mpany fi nanci al perfor mance pre and post I PO. H1 : There is a si gnifi cant difference of co mpany fi nanci al perfor mance pre and post I PO.
RESEARCH METHOD
Source of Dat a
The dat a i n t hi s r esearch i s coll ect ed fr o m secondary dat a. The secondar y data wer e gat hered fr o m books, lit erat ures, arti cl es, j our nal s, an all rel evant lit erat ure fr o m t he li brar y and i nt er net. Thi s r esearch uses t he i nf or mati on fr o m t he fi nanci al sect or yet t he mai n dat a t hat i s used i n t hi s r esearch i s t he fi nanci al dat a t hat i s descri bed and report ed i n t he fi nanci al st at e ment whi ch refl ect s t he conditi on of t he fi nanci al perfor mance.
Fi nanci al st at e ment such as t he r at e of CAR ( Capit al Adequacy Rati o), NPL ( Non Perf or mi ng Loan), ROA ( Ret ur n on Asset), ROE ( Ret ur n on Equit y), OEOI ( Oper ati ng Expense t o Oper ati ng I nco me), NI M ( Net Int erest Mar gi n) and LDR ( Loan t o Deposit Rati o) used by t hi s r esearch t o eval uat e t he fi nanci al perf or mance Bank Central Asi a, Tbk. All t hose seven f act ors become t he mai n dat a t o eval uate t he conditi on of a bank. Al l t hose dat a got from t he annual report of Bank Central Asi a, Tbk. bef ore and aft er t hey go publi c.
Popul ati on and Sa mpl e
The popul ati on t hat i s used t o eval uat e t he fi nanci al perfor mance of Bank Cent ral Asi a, Tbk. bef ore and aft er t hey go publi c are all fi nanci al dat a t hat are needed as vari abl es t o det er mi ne t he conditi on and descri be t he fi nanci al perfor mance of t he bank it self. Specifi c i nf ormati on of popul ati on co mes fr o m t he seven mai n f act ors or vari abl e t hat i s used t o eval uat e t he fi nanci al perfor mance. Dat a fr o m fi nanci al rati o consi st of Capi t al
FI NANCI AL PERF OR MANCE Post I PO Pr e I PO
CAMEL
320 Jur nal EMBA Vol. 1 No. 4 Dese mber 2013, Hal . 316- 323 Adequacy Rati o, Non Perfor mi ng Loan, Ret ur n on Asset, Ret ur n on Equit y, Operati ng Expense t o Oper ating Inco me, Net I nt erest Mar gi n and Loan t o Deposit Rati o. The sa mpl e of t hi s research al so co mes fr o m t he fi nanci al dat a t hat descri bed i n t he fi nanci al rati o. The sa mpl e of dat a i s t aken fr om year 1998 t o 2002, where i n Ma y, 2000 t he I PO acti on is t aken by Bank Cent ral Asi a, Tbk. and as t he co mparisons; t hi s r esearch uses t wo years bef ore t he I PO and also t wo years aft er t he I PO.
Operati onal Defi niti ons and Meas ure me nt of Research Vari abl es
The operati onal defi niti ons of t hi s research consi st of the pre I PO conditi on and post I PO.
Pre I PO i s a condition before t he company listed t heir shares and traded on I ndonesia St ock Exchange. Pre , 32L V D VLW XDWL RQ ZKHQ D FR PSDQ\ RIIHUV VKDUHV SUL RU W R W KH ILU P¶V L QLWL DO SXEOL F RIIHUL QJ 6FRWW
Post I PO i s sit uation where t he company has registered its shares t o t he fir m's initial public offeri ng, and i nvest ors began t o buy t he co mpany' s shares t hat are list ed on t he st ock exchange.
Pai red Sa mpl e Anal ysi s
Paired sa mpl e anal ysi s i s used t o anal yze one obj ect wi t h di fferent conditi on. I n t hi s case t he obj ect i s Bank Cent ral Asi a, Tbk. i n t wo di fferent conditi ons whi ch ar e; bef ore and aft er t he I niti al Publi c Off eri ng i n li mit peri od of 1998 t o 2002. Thi s anal ysi s use t he SPSS pr ogra m t o eval uat e i f t here i s a si gnifi cant differences of co mpany fi nanci al perfor mance pre and post Initi al Publi c Offeri ng of Bank Central Asi a, Tbk.
RES ULT AND DI SCUSSI ON
Res ul t
The conditi on of Capit al Adequacy Rati o bef ore and aft er Initi al Publi c Offeri ng was st abl e around 30 % t o 35 % except i n year 1998, Capit al Adequacy Rati o was recor ded at l evel -41. 78%. Thi s sit uati on caused by t he econo mi c crisis t hat hit Indonesi a i n 1998. In 1999, t he rati o percent age i ncreased t o meet st andar d at level 34. 38 %. The percent age after Initi al Publi c Offeri ng of Capit al Adequacy Rati o as much as 32. 64 % i n 2001 and 32. 19 % i n 2002 refl ect ed a st abl e pr ogress and meet t he st andar d st at ed by Central Bank of Indonesi a above or mor e t han 8 %. Obvi ousl y, the Initi al Publi c Offeri ng did not bri ng t hi s vari abl e t o a bett er conditi on or bett er level i n fi nanci al perfor mance.
Non Perf or mi ng Loan r atio al so sho wed a si gnifi cant change based on dat a recor ded on t he annual report of Bank Cent ral As ia, Tbk. I n Dece mber 1998, dat a r ecor d Non Perf ormi ng Loan r ati o was at l evel 84. 49 % and i n t he next year, Loan t o Deposit rati o decreased t o l evel 8. 92 % after bank r ecapit ali zati on pol i cy issued by Central Bank of I ndonesi a. I n 2001, aft er I nitial Publi c Offeri ng a year bef ore, t he percent age of Loan t o Deposit Rati o sl ope t o l evel 3. 22 % and still decreased i n 2002 at l evel 3. 15%. It met t he st andar d set by Cent ral Bank of Indonesi a that st at ed t he Non Perf or ming Loan rati o shoul d bel ow t han 5 %..
Net I nt erest Mar gi n Rati o sho wed a si gnifi cant change based on dat a r ecor ded on t he annual r eport of Bank Cent ral Asi a, Tbk. In 1998, dat a r ecor d Net I nterest Mar gi n r ati o was at level - 22. 84 % and i n t he next year, Net I nt erest Mar gi n rati o i ncreased t o l evel - 6. 60 % aft er bank r ecapit ali zati on poli cy i ssued by Central Bank of I ndonesi a. I n 2001, aft er I niti al Publi c Offeri ng a year bef ore, t he percent age of Loan t o Deposit Rat i o escal at ed at l evel 5. 65 % and still i ncreased i n 2002 at level 5. 77 %. Al t hough it was not meet t he st andar d t hat st at ed Net I nt erest Mar gi n rati o shoul d mor e t han or above 7 %, Net I nt erest Mar gi n Rati o at t hat ti me was t he hi ghest l evel aft er Initi al Publi c Offeri ng t ook pl ace i n Ma y 2000.
Based on t he r esult or t he dat a fr o m t he fi nanci al r atio, t he percent age of Ret urn on Asset fr o m year 1998 t o 1999 as t he year aft er I niti al Publi c Offeri ng wi t h year 2001 t o 2002, t here was an i ncreasi ng l evel of Ret ur n on Asset. Ret ur n on Asset i n 1998 was - 39. 82 % and i ncreased i n 1999 as much as 0. 80 %. I n 2001 t he percent age still escal at es t o 3. 50 % and decreased i n 2002 at l evel 3. 18 %. Year 2001 was t he hi ghest per cent age of Ret ur n on Asset t hat ever r ecor d i n l ast fi ve years. The percent age bef ore and aft er t he I niti al Publi c Off eri ng sho ws good t he conditi on and t he rati o meet t he st andard as regul at ed as much as above t han 1. 5 %.
The percent age of Ret ur n on Equit y al so had t he good result aft er t he I niti al Public Offeri ng t ook pl ace. The l evel of Ret ur n on Equit y met t he st andar d, as much as r egul at ed above 15 %. The Ret ur n on Equit y i n year 1998 t o 1999 was st at ed as not meani ngf ul, and aft er t he I niti al Publi c Offeri ng i n 2000, t he percent age of Ret ur n on Equit y i ncreased t o 38. 32 %, and al so t hat was t he hi ghest l evel aft er I niti al Publi c Offeri ng t ook pl ace. I n next year 2002, t he Ret ur n on Equit y r ati o was decreased t o 35. 50 % but it was still met t he st andar d set by Central Bank of Indonesi a t hat st at ed t he Ret ur n on Equit y rati o shoul d above t han 15 %.
Jur nal EMBA 321 Vol . 1 No. 4 Dese mber 2013, Hal . 316- 323
The percent age of Oper ating Expense t o Operati ng I nco me s ho w a good r esult aft er t he I niti al Publi c 2II HUL QJ W RRN SO DFH HYHQ LW VWLOO GL GQ¶W PHHW W KH VW DQGDUGW KDW VW DW HG W KH U DWL R VKRXO G EHO RZW KDQ 7KH U DW L R i n 1998 t o 1999 was st at ed as not meani ngf ul, and after t he I niti al Publi c Offering i n 2000, t he percent age of Oper ati ng Expense t o Operati ng I nco me sl ope t o 78. 40 %. I n next year 2002, t he Oper ati ng Expense t o Oper ati ng I nco me was decrease t o 77. 69 % and still not met t he st andar d set by Cent ral Bank of I ndonesi a t hat st at ed t he Oper ati ng Expense t o Oper ati ng I nco me r atio s houl d bel ow t han 50 %. Even it i s not met t he st andar d yet, it i s a good r esult based on t he pr ogress year t o year aft er t he I niti al Public Offeri ng t ook pl ace i n Ma y 2000.
The r esult of Loan t o Deposit Rati o sho wed a si gnifi cant change bas ed on dat a recor ded on t he annual report of Bank Central Asi a, Tbk. I n 1998, dat a r ecor d Loan t o Deposit rati o was at l evel 86. 72 % and i n t he next year, Loan t o Deposit rati o decreased t o l evel 4. 72 % af ter bank r ecapit ali zati on policy i ssued by Central Bank of Indonesi a. I n 2001, aft er I nitial Publi c Offeri ng a year bef ore, t he percent age of Loan t o Deposit Rati o escal at ed at l evel 16. 06 % and still i ncreased i n 2002 at l evel 20. 44 %. Al t hough it was not meet t he st andar d t hat st ated Loan Deposit Rati o shoul d ar ound 85 % - 110 %, Loan t o Deposit Rati o at t hat t i me was t he hi ghest l evel aft er Initi al Publi c Offeri ng t ook pl ace i n May 2000.
Pai red Sa mpl e
Based on t he r esult of Paired Sa mpl e Anal ysi s, t he conditi on of fi nanci al perf or mance s ho wed t he good changes t hat descri be i n t he si gnifi cant i n 0. 041. Thi s nu mber t ol d t he si gni fi cant effect t o t he fi nancial perfor mance of Bank Cent ral Asi a, Tbk. bef ore and aft er I niti al Publi c Offeri ng. The I niti al Publi c Off eri ng br ought t he conditi on of fi nanci al perfor mance beca me bett er t han bef ore I PO.
Tabl e 1. Pai red Sa mpl es Statisti cs
Me an N St d. Devi ati on St d. Err or Mean
Pair 1 Bef ore I PO 7. 7843 7 27. 25818 10. 30262
Aft er I PO 40. 6914 7 16. 54633 6. 25392
Sour ce: Dat a Pr ocessed, 2013
Tabl e 1 s ho ws t he mean bef ore I PO i s 7. 7843 wi t h st andar d devi ati on 27. 25818 and st andar d err or mean 10. 30262, wher eas t he r esult aft er I PO mean i s 40. 6914 wi t h st andar d devi ati on 16. 54633 and st andar d err or mean is 6. 25392.
Tabl e 2. Pai red Sa mpl es Test
Paired Differences t df Si g. (2-t ail ed) Me an St d. De vi ati on St d. Err or Me an 95 % Confi dence Int er val of t he Di fference Lo wer Upper Pair 1 Bef ore I PO -- Aft er I PO -3. 29071E1 33. 67759 12. 72893 -64. 05372 -1. 76057 -2. 585 6 . 041 Sour ce: Dat a Pr ocessed, 2013
Tabl e 2 s ho ws t he I niti al Publi c Offeri ng of Bank Central Asi a, Tbk. gi ves a si gnifi cant differences t o its fi nanci al perf or mance as s ho wed i n si gnifi cant ( 2-t ailed) as much as 0. 041. The r esult of si gnifi cant ( 2-t ailed) is under 0. 05 and it i s showe d t he si gnifi cant r esult. Al so fr o m t he paired sa mple t est get s mean - 3. 29071E1, st andar d devi ati on 33. 67759, st andar d err or mean 12. 72893, l ower of 95 % confi dence i nt er val of t he di fference -64. 05372, upper of 95 % confi dence i nt er val of t he difference - 1. 76057, score of t is -2. 585, and df is 6.
322 Jur nal EMBA Vol. 1 No. 4 Dese mber 2013, Hal . 316- 323 Di scussi on
Cent ral Bank of I ndonesi a has set a r egul ati on i n or der t o measure a bank i s i n good conditi on or not. The r egul ati ons set by t he central bank of I ndonesi a, s uch as t he r egul ati on i n st andar d of Capit al Adequacy Rati o, Non Perf or mi ng Loan, Net I nt erest Mar gi n, Ret ur n on Asset, Ret ur n on Equit y, Oper ati ng Expense t o Oper ati ng I nco me and Loan t o Deposit Rati o have beco me t he mai n f act ors t o det er mi ne t he conditi on of t he bank itself.
The seven mai n i ndi cat ors as t he part of CAMEL wer e used by t hi s r esearch t o eval uat e t he perfor mance of Bank Cent ral Asi a, Tbk. pr e and post I niti al Publi c Offeri ng. The seven mai n i ndi cat ors also beco me t he seven mai n i ndependent vari abl es. Those vari abl es al so shoul d meet t he st andar d t hat al ready regul at ed by t he central bank as t he bank t hat manage t he ot her banks. The mai n seven vari abl es are, Capi t al Adequacy Rati o as much as above 8 %; Non Perf or ming Loan ( NPL) as much as bel ow t han 5 %; Net I nt erest Mar gi n as much as above t han 7 %; Ret ur n on Asset (ROA) t hat was r eco mmended by t he central bank as much as above t han 1. 5 %; Ret urn on Equit y ( ROE) as much as above t han 15 %; Operati ng Expense t o Oper ating Inco me as much as bel ow than 50 % and Loan t o Deposit Rati o ( LDR) as much as bet ween 85 % t o 110 %. Those are t he mai n vari abl es t hat wer e used t o eval uat e t he perf or mance of t he fi nanci al perfor mance.
The seven mai n f act ors or vari abl es had each mai n st andar d as r egul at ed by t he central bank, i n t hi s case t he Central Bank of I ndonesi a. Many f act ors t hat meet t he st andar d r efl ect t he healt hi er or good perf or mance of t he bank perf or mance, and vi ce versa when many f act ors t hat cannot meet t he st andar d t hat means t he perfor mance i s not good. These vari abl es as part of CAMEL wer e used wi del y t o eval uat e bank conditi on all over t he worl d. The CAMEL s yst e m i s used t o assi gns a nu meri cal r ati ng t o a deposit or y i nstit uti on based on exa mi ner j udg ment r egar ding it s capit al adequacy, asset conditi on, manage ment qualit y, ear ni ngs r ecor d, and li qui dit y positi on.
Tabl e 3. Average Pre and Post Initi al Publi c Offeri ng
Rati o Pre I PO Post IPO Ce nt ral Bank
CAR -3. 7 % 32. 41 % > 8 % NPL 46. 70 % 3. 18 % < 5 % NI M -14. 72 % 5. 71 % > 7 % ROA -19. 51 % 3. 34 % > 1. 5 % ROE n. m 36. 91 % > 15 % OEOI n. m 78. 04 % < 50 % LDR 45. 72 % 18. 25 % 85 % - 110 %
Sour ce: Dat a Pr ocessed, 2013
The average pr e and post Initi al Publi c Offeri ng of Bank Cent ral Asi a, Tbk. aft er t he I PO t hat sho wed on t he t abl e above, t he bank i n t hi s case t he fi nanci al perfor mance as t he mai n f act or t o det er mi ne t he conditi on of bank beca me bett er t han bef ore t he I PO. The period of pr e I PO i s 1998 t o 1999 and aft er I PO i n 2001 t o 2002. The average percent age of ever y vari abl e t hat meet s t he st andar d sho wed mor e i n t he peri od aft er t he I P O. The percent age of Capit al Adequacy Rati o, Non Perf or mi ng Loan, Net I nt erest Mar gi n, Ret ur n on Asset, Ret ur n on Equit y, Operati ng Expense t o Operati ng I nco me and Loan t o Deposit Rati o wer e bett er aft er t he I PO. Ther e are onl y one vari abl e t hat sho wed negati ve aft er t he I PO, whi ch is Loan t o Deposit Rati o.
The I niti al Publi c Offeri ng i s t he alt ernati ve t hat can be t aken by any co mpany, i n t hi s cont ext i s fi nanci al co mpany t hat i s Bank Central Asi a, Tbk. t o hel p i n f aci ng t he tight er and har der co mpetiti on environ ment t hat also affected by t he ext ernal fact or such as t he gl obal fi nanci al crisis.
CONCLUSI ON AND RECOMMENDATI ON
Concl usi on
The concl usi on of t hi s r esearch, t he I niti al Publi c Off eri ng of Bank Central Asi a, Tbk. gi ves a si gnifi cant difference of company fi nanci al perf or mance. The fi nanci al perf or mance of Bank Cent ral Asi a, Tbk. fro m t he descri pti ve anal ysis and paired sa mpl e anal ysis sho w t he fi nanci al perf or mance change t o better conditi on, such as t he bet ter l evel or percent age of fi nanci al r ati o t hat meet or bett er t han t he st andard as regul at ed central bank.
Jur nal EMBA 323 Vol . 1 No. 4 Dese mber 2013, Hal . 316- 323
Thi s conditi on al so hel ps t he bank t o co mpet e wi t h t he ot her co mpetit ors, especi all y hel p t he bank t o face har der conditi on of econo mi c t hat i s caused by t he gl obal fi nanci al crisis, t hat make s o me co mpany coll apse. The I niti al Publi c Off eri ng l ed Bank Cent ral Asi a, Tbk. beco me bi gger i n capit al and al so i ncreases t heir perfor mance i n fi nancial sect or.
Reco mme ndati on
Bank Cent ral Asi a, Tbk. already pr oved t heir acti on t hat t akes I PO t o make a co mpetiti ve bank but al so wi t h bett er perf or mance. Many co mpani es especi all y bank al so t ake such t hi s action but so me of t he m f ail t o get t heir mai n pur pose of I PO, whi ch i s t o make a co mpetiti ve bank and bett er perf orma nce. The mai n poi nt of I P O is not j ust gai n mor e capit al f or bank t o make a bank mor e po werf ul and co mpet iti ve, but al so it must f oll owe d by t he bett er fi nanci al perfor mance and manage ment t o achi eve t he goal.
Faci ng no wadays econo mi c environ ment t hat i s i dentical wit h t he gl obal fi nanci al cri sis, t he I niti al Publi c Offeri ng coul d be a sol uti on or alt er nati ve f or banki ng i ndustry. The I niti al Publi c Offeri ng hel p t he bank t o i ncrease t he Capit al t hat can be used f or banks expansi on and l ead t o hi gher i nvest ment f oll owed by hi gh gr owt h opport uniti es for t he bank itself.
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