JAKARTA. Layoffs in the banking industry may continue this year, but the number will not be as high as in 2015 when thousands of workers lost their jobs, a senior official from the Financial Services Authority (OJK) has said.
Financial Services Authority (OJK) deputy commissioner for banking supervision Irwan Lubis said in Jakarta on Tuesday there had been massive layoffs in the banking industry last year after some banks took consolidation measures to improve the efficiency of their businesses.
For this year, Irwan predicted that some banks would still have to reduce their workforce, but if they were to do so, the numbers would be far lower than last year.
Last year, several banks decided to offer early retirement programs to their employees as they struggled with rising expenses and falling revenues caused by the country’s economic slowdown.
Among the banks that decided to cut back employees were the private lenders Bank Danamon and CIMB Niaga.
Irwan Lubis said the banks had reduced their workforce through voluntary early retirement programs, which offered a special retirement package for their workers. “The compensation offered by the banks was deemed quite attractive by their employees. More employees applied for the early retirement than the number approved of by their employers,” Irwan said in Jakarta on Tuesday evening.
After enjoying more than 20 percent loan growth for years, domestic banks recorded credit growth of just 10 to 11 percent last year. Furthermore, net profits declined in the face of to numerous economic challenges.
Bank Danamon, the country’s sixth largest bank, offered an early retirement program to the employees of its micro-banking unit, Danamon Simpan Pinjam (DSP).
Danamon finance director Vera Eve Lim said the early retirement program was conducted in compliance with prevailing laws and regulations, and the bank had consulted with its labor union.
“In this regard, some 2,000 employees of Danamon Simpan Pinjam participated in the early retirement program in 2015,” Vera said in an email on Tuesday.
She added that Danamon had taken the initiative to strengthen the growth of DSP, which is one of the company’s core mass-market businesses.
Publicly-listed CIMB Niaga, part of Malaysia’s CIMB financial group, also cut at least 1,700 employees last year through an early retirement program, its strategy and finance director Wan Razly Abdullah said.
Both banks have suffered declines in earnings starting in 2014 and continuing until September last year due to Malaysia’s sluggish economic growth.
Danamon saw year-on-year (yoy) net profit declines of 36 percent in 2014, followed with 21 percent yoy, 16 percent yoy and 10 percent yoy declines in the first, second and third quarters of last year, respectively.
The profit declines in Danamon were mainly caused by the country’s weak sales in vehicles, as 36 percent of the bank’s loans are centered around its auto-financing subsidiary, Adira Finance.
Meanwhile, CIMB Niaga suffered from yoy net profit declines of 45.3 percent in 2014, with 92.4 percent yoy, 91 percent yoy and 88.5 percent yoy declines in the first, second and third quarters, respectively. (Grace D. Amianti)
