digital banking transformation

DIGITAL BANKING TRANSFORMATION FOR SUSTAINABLE BUSINESS

Company’s Initiative in Implementing Sustainable Financing to Support The Achievement of Sustainable

Development Goals

Sustainable Performance

Overview 2017

President Director’s Statement

On the Sustainability Report

About The Company Sustainability Governance

Providing Economic Benefits

Company’s Support in Environmental

Conservation

Human Resources Management

Commitment to Provide The Best Services

Program Strengthening of Inclusion Banking and

Financial Literacy

Support for Enhancing the Community’s Quality of Life

Cross Reference GRI Standard Index with

Financial Services Sector Supplement

1

resources through digital leadership, the establishment

of school programs, and the development of developers

through the Housing Finance Center (HFC). To provide

better service to the customers, the Company provides

digital-based products and services. The Company has

also synergized the digital banking with its flagship

product, i.e. Housing Loan, through the BTN Property

Portal service.

As a responsible business implementation, the Company

implemented various sustainable financing initiatives to

support the achievement of sustainable development

goals. The Company ensures the business conducted is

pro-environment and pro-community, through the policy

of environmentally friendly credit as part of environmental

risk management, the acceleration of digital banking

transformation in banking products to save more paper,

delivery of inclusive banking products and services that can

reach all levels of society, and consistent implementation

of Partnership and Community Development Programs

(PKBL) to support the improvement of people’s lives and

to encourage national economic growth.

In 2017, PT Bank Tabungan Negara (Persero) Tbk. enters

the 2nd Phase of Transformation, the digital banking

period. This transformation is a strategic step for the

Company in supporting the achievement of the national

program targets initiated by the Government, because

there are still about 11.4 million Indonesians who do not

have houses. Thus, so the Company has an opportunity

momentum to increase capacity. On the other hand,

by 2020, Indonesia will enter the ASEAN Economic

Community (AEC), which will lead to intense competition.

Thus, the Company established a digital mindset to create

a more effective and efficient business pattern.

A series of strategic programs have been implemented

to support this transformation in terms of business

process digitalization, infrastructure, to human resources.

The Company has performed improvement of business

process, from the accelerated Standard Operating

Procedure (SOP), standardization of On the Spot Checking

process which applies the compliance principle, and

changes of brand activity and organizational structure,

as the Head Office is currently acting as a conceptual

strategist, the Regional Offices as Operational Strategic,

and the Branch Offices as Sales and Service. To support

the improvement of the business process, the Company

also enhances the capacity and capability of human

DIGITAL BANKING TRANSFORMATIONFOR SUSTAINABLE BUSINESS

Digital Banking Transformation for Sustainable Business

01 COMPANY’S INITITATIVE IN IMPLEMENTING SUSTAINABLE FINANCING TO SUPPORT THE ACHIEVEMENT OF SUSTAINABLE DEVELOPMENT GOALS

Bank BTN Digital Services, Source: Herwin Gunari

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In order to support and realize the sustainable development goals (SDGs) starting on September 25, 2015, it is necessary that all industry sectors take roles to perform strategic steps to promote harmony between the economic, social, and environmental aspects into the company’s business Therefore, the Company as one of the agents of development is committed to implementing the sustainable financing initiated by the Financial Services Authority (OJK) with Sustainable Finance Roadmap and the Financial Services Authority Regulation No. 51/POJK.03/2017 on the Implementation of Sustainable Finance.

Sustainable finance is a comprehensive support of the financial services sector to create sustainable economic growth by harmonizing the triple bottom line principle, i.e. economic, social, and environmental. In the implementation, there are eight principles, i.e. (1) Responsible Investment, (2) Strategy and Sustainable Business Practices, (3) Social and Environmental Risk Management, (4) Good Governance, (5) Informative Communication, (6) Inclusiveness, (7) Priority Sector Development, and (8) Coordination and Collaboration.

The Company has applied these principles to the Company’s business activities. In the Responsible Investment Principles and Social and Environmental Risk Management Principles, the Company has committed to managing the environmental risk management through an environmentally friendly credit policy, which is a credit rating that takes into account the results of the Environmental Impact Assessment (AMDAL) before deciding to grant credit to a project. The policy is stated in Circular Letter No. 17/DIR/CMLD/2016 on March 31, 2016, on Standard Operating Procedure Commercial Loan paragraph 4.1.3.3 point j, i.e. ‘Environmental Management Effort or Environmental Monitoring Effort (UKL/UPL) and/or Environmental Impact Assessment (AMDAL) if required by the local government, or required in a Location Permit or Land Use Permit’. In addition to the AMDAL consideration, the Company also conducts on-site monitoring to ensure that the debtor or developer fulfills environmental requirements.

In implementing the Principles of Strategy and Sustainable Business Practices, in 2017, the Company accelerated the transformation of digital banking as a strategy to support the Company’s business growth and as the Company’s initiative to minimize negative impacts to the environment through paperless saving. The initiatives include synergizing digital banking with the Company’s flagship product, i.e. Housing Loan, through BTN Property Portal service, adding Smart Branch, increasing transaction using Electronic Channel, providing Digital Solution Application that enables customers to conduct digital payment transactions, and establishing BTN Zone in several universities to encourage cashless society in the millennial generation. In addition, the sustainable business strategies and practices are also implemented through Partnership and Community Development Program (PKBL), BUMDes (Village-Owned Enterprises) and Farmers Entrepreneurship Program, Program Keluarga Harapan (PKH) through the provision of PKH cards to fulfill the education-related needs, Social Assistance Program (Bansos) in the form of savings, and the Social Forest Program that provides access to forest communities to manage forest areas in order to improve the lives and welfare of the people.

The Company implements the BUMDes (Village-Owned Enterprise) and Farmers Entrepreneurship Programs as part of applying the Priority Sector Development Principle to improve the people’s welfare and economy, BUMDes, and Entrepreneurship Farmers are some of the priority programs initiated by the Ministry of Village, Development of Disadvantaged Regions, and Transmigration (Kemendes PDTT), in cooperation with the Ministry of Agriculture, Ministry of SOEs, and Banking. These programs’ objective is to finance BUMDes business, thus encouraging villagers to manage the economy autonomously. The Company as an SOE Bank, is involved as an accelerator that incorporate agriculture and develops BUMDes by providing financing schemes support to provide management training and access to financial inclusion to BUMDes.


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As the implementation of the Governance Principles, the Company has integrated the sustainability aspects into the principles of TARIF (Transparency, Accountability, Responsibility, Independence, and Fairness). In the Sustainability Report, all reported information relating to economic, social, and environmental aspects are adequate, clear, accurate, accountable, and accessible to all stakeholders. In carrying out the sustainability aspect, the Company complies with applicable regulations, such as employment-related regulations, customer data confidentiality, waste management, and the implementation of the Partnership and Community Development Program in accordance with the Minister of SOEs Regulation PER-02/MBU/7/2017 dated July 5, 2017 on the Second Amendment to the Minister of State-Owned Enterprises Regulation No. PER-09/MBU/07/2015 on Partnership and Community Development Program. The application of the fairness principle is realized by the fair treatment of all stakeholders and provides an opportunity for all stakeholders in conveying topics related to sustainability issues to involve the stakeholders.

To support the government’s program in enhancing the accessibility of financial services to reach all levels of society, thus accelerating the economic progress, social welfare, and reducing gap levels, the Company also implements the Inclusive Principle. The Company provides inclusive and sustainable banking products through TCASH-BTN Cermat Service, provides mortgage facilities for informal workers (BTN Housing Loan for Gojek Partners and BTN Micro Housing Loan for associations and communities). The Company also develops Micro, Small, and Medium Enterprises (MSMEs) through KUMK and KUR (People’s Business Credit) schemes, digital banking services development, and various financial literacy programs such as Savings of BTN SimPel (Student Savings) and Property Entrepreneurship Literacy Training.

With the many challenges faced, the Company needs synergy through collaboration and cooperation with stakeholders. Therefore, the Company also applies the Coordination and Collaboration Principle. Given the challenges in regulatory and licensing issues, the Company has approached the Regulators and Local Governments to facilitate permits to build houses and buildings. The Company also approached the National Defense Agency (BPN) on how to use unproductive land into housing. In addition, in 2017, the Company also collaborated with students from 25 Universities in Indonesia in the Property Literacy Training program, which aims to improve their skills in building property business to accelerate the improvement of economic prosperity.

Through the Sustainability Report, the Company has made this report as continuous dialogue process. Thus, this report is a Company’s media in implementing Informative Communication Principles. The report discloses the business and performance impacts of the Company that are not only related to economic achievements, but also concerns the Company related to the social and environmental aspects. Through this report, the Company’s stakeholders, i.e. shareholders, customers, employees and unions, partners, Government and Financial Authorities, business organizations, communities, and the media can also convey their wishes to the Company.

In addition to the implementation of these sustainable financial principles, the Company has also performed a series of other initiatives to achieve the sustainable development goals. The programs include supporting better education, supporting strengthening financial inclusion, creating a viable employment system, facilitating equitable infrastructure development, and enhancing community entrepreneurship programs.

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IMPROVING QUALITY OF EDUCATION• StudentsUnderstandtheIndonesiaArchipelago• GrantingScholarship• ProvisionofSupportingFacilitiesandInfrastructureforSchoolActivities

SUPPORTS FINANCIAL INCLUSION STRENGTHENING • TCASH-BTNCermatService• ProvisionofHousingLoanFacilityforInformalWorker• ExpandingAccessPointofEquitableFinancialServices• DevelopingElectronicChannel• BTNSimPel(StudentSaving)Savings• PropertyEntrepreneurshipLiteracyTraining

CREATING A VIABLE AND EQUITABLE EMPLOYMENT SYSTEM• SustainableandNon-DiscriminatoryJobsCreation• EliminationofForcedLabor,ChildLabor,andDiscrimination• EqualityinRemunerationandEmployeeWelfare

FACILITATING EQUITABLE INFRASTRUCTURE DEVELOPMENT • OneMillionHousesProgramforthePeople• RoadRepairandArrangement• DevelopmentofWorshipSpaceinVariousAreasofIndonesia• ProvisionofHealthFacilitiesandInfrastructures

IMPROVING THE COMMUNITY ENTREPRENEURSHIP PROGRAM• CommunityEconomicDevelopmentThroughKaranganyarVillageEconomic

Center (Balkondes), Village Tourism Center of Pottery Industry• BUMDesandFarmersEntrepreneurshipPrograms• ImprovingAccesstoFinancingofMicro,SmallandMediumEnterprises

(MSMEs) and People’s Business Credit (KUR)

SDGs

FRA

MW

ORK


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02 SUSTAINABLE PERFORMANCE OVERVIEW2017

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EnvironmEnt ovErviEw

Distributed Economic Value

Increased by 14.93%

Dividend Payment to

ShareholdersIncreased by

41.49%

Direct Economic Value

Increased by 13.30%

Tax Payment to the

GovernmentIncreased by

26.64%

Mortgage Loan Disbursement

100.12% of Target

Economic ovErviEw

Participation in Earth Hour Campaign for Electricity Savings

61.9 kWh/hour

Paper Use Efficiency with iflow Application

Environmental risk management policy in

loan disbursement

The Environmental Management and Conservation CostRp157.20 Million

Rp20,847,165 million

Rp19,654,406 million Rp2,467,501 million Rp523,780 million 666,806 Units


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Salary Ratio of Entry Level Employees to

Minimum Wage1.45

Disbursement of CSR Program

Increased by 48.88%

Employees’ Promotion991 male

employees700 female employees

PKBL Program Disbursement

increased by 75.08%

Disbursement of MSME credit

Increased by 48.88%

1.451,691 Rp26,144 million

Social ovErviEw

SOE Synergy Program to Improve Community’s Lives:1. Social Assistance (Bansos)2. Program Keluarga Harapan (PKH)3. Village-Owned Enterprises

(BumDes)4. Farmers Entrepreneurship

Program5. Social Forest6. Community Economic

Development Through Karanganyar Village Economic Center (Balkondes)

Provision of Housing Loan Facility for Informal Worker

Employee Training Program

1. School of Leadership

2. School of Operational Banking

3. School of Business Banking

Average Training Hours

22.17 hours trained/participant

MURI record as pioneer of property entrepreneurship literacy with the most participants in Indonesia

12,000 participants

Rp5,148 million Rp1,508,323 million



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CONTENTS

69 The Company’s Commitment to the Environmental Conservation

69 Development of Environmental Friendly Credit Disbursement

70 Environmental Friendly Banking Operations (Green Banking)

74 Go Green Program

75 The Environmental Management and Conservation Cost

63 Economic Value Distribution

64 The Company’s Contribution to the State

64 Management of Indirect Economic Impacts

66 Empowerment of Local Suppliers

02 COMPANY’S INITIATIVE IN IMPLEMENTING SUSTAINABLE FINANCING TO SUPPORT THE ACHIEVEMENT OF SUSTAINABLE DEVELOPMENT GOALS

06 SUSTAINABLE PERFORMANCE OVERVIEW2017

25 Significant Changes to the Company

25 Certifications and Awards in 2017

30 Bank BTN Brief History

32 Significant Events in 2017

36 Company’s Vision, Mission and Corporate Culture

38 Company’s Business Activities

40 Company’s Organization

42 Company’s Shareholding

44 Operational Area and Market Share

46 Company’s Supply Chain

46 Company’s Organizational Scale

46 Association Membership

ABOUT THE COMPANY

24

49 Company’s Governance Roadmap

50 Corporate Governance Structure

55 Risk Management

56 Standards of Ethics and Code of Conduct

57 Anti-Corruption Training and Communication

57 WhistleblowingReportingMechanism

60 Stakeholders’ Involvement

SUSTAINABILITY GOVERNANCE

48

PROVIDING ECONOMIC BENEFITS

62

COMPANY’S SUPPORT IN ENVIRONMENTAL CONSERVATION

68

PRESIDENT DIRECTOR’S STATEMENT

10

ON THE SUSTAINABILITY REPORT

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102

94

77 Human Resources Roadmap

78 Employee’sDiversityandEqualOpportunities

82 Recruiting the Best Personnel

83 Employee Turnover

83 Employees’ Training and Competence Development Program

85 Harmonious Industrial Relations and Freedom of Association

86 Performance Assessment System and Employee’s Career Development

87 RemunerationSystemandEmployee’sWelfare

89 Employee Engagement Survey

91 Occupational Health and Safety Management

93 Employee Complaint Management

HUMAN RESOURCES MANAGEMENT

76

COMMITMENT TO PROVIDE THE BEST SERVICES

9495 Providing Sustainable and Inclusive Products

97 Disclosure of Products and Banking Services Information

97 Innovation of Products and Banking Services

97 Prioritizing Customer Privacy and Data Security

98 Marketing Communication

99 Customer Complaint Management

101 Customer Satisfaction Survey

PROGRAM STRENGTHENING OF INCLUSION BANKING AND FINANCIAL LITERACY

102

103 Launching of TCASH-BTN Cermat Service

104 Provision of Housing Loan Facility for Informal Workers

105 Support for Micro, Small, and Medium Enterprises (MSMEs) Development

109 Strengthening of Financial Service in Low Population Provinces and Disadvantage Regions

110 The Development of Digital Banking Services

113 Financial Literacy Program

SUPPORT FOR ENHANCING THE COMMUNITY’S QUALITY OF LIFE120

121 CSR Vision and Mission

121 Company’s CSR Program Implementation

134 Funds Realization for Community Programs

138 CROSSREFERENCEGRISTANDARDINDEXWITHFINANCIAL SERVICES SECTOR SUPPLEMENT

144 FEEDBACK FORM FOR STAKEHOLDER



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Laporan Keberlanjutan 2017


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PRESIDENT DIRECTOR’S STATEMENT [Gri 102-14] 03

“Digital Banking Transformation For Sustainable Business” We consider sustainability as a pro-community and pro-environment concept, in line with the running of Company’s business process. Therefore, We are committed to always carry out accountable business, through the consistency by providing economic benefit to all stakeholders, maintain environmental sustainability through the provision of credit that takes into account environmental risks, and run the Partnership and Community Development Program to continuously improve the quality and welfare of the community.



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Dear distinguished stakeholders,

Welcome to PT Bank Tabungan Negara (Persero) Tbk.

Sustainability Report 2017. This year, We continue

to maintain our commitment to deliver the eighth

Sustainability Report. This report demonstrates

our commitment to implementing the principle of

sustainability, i.e. business integration with a commitment

to preserving the environment and to improving the

quality and welfare of the community.

We recognize that the targets of sustainable development

goals must be supported by accountable business

activities, i.e. by continue to take care of the sustainability

aspect. Therefore, We, as one of the actors in Indonesia’s

banking industry, is committed to implementing the

sustainable financing initiated by the Financial Services

Authority (OJK) with Sustainable Finance Roadmap

and the Financial Services Authority Regulation No. 51/

POJK.03/2017 on the Implementation of Sustainable

Finance.


In 2015, We have completed the first phase

transformation or survival period. This phase succeeded

in making the Company as the market leader in Housing

Loans (KPR) in Indonesia. In 2016, We are going through

the second phase of transformation (2016—2019), i.e.

digital banking period, with the expectation to bring us

as the global industry leader, i.e. the leading housing

bank in Indonesia with world-class service. In 2017, We

continue to transform the digital banking by providing

various programs and initiatives. This transformation

is necessary to face the high competitiveness in the

banking industry, and to increase service to customer

and community. We have conducted various acceleration

of the digital banking transformation, as follow:

1. BTN Property Portal, which is an integration between

digital banking with the Company’s flagship product,

i.e. Housing Loan (KPR) that facilitates prospective

borrowers to apply for housing loans online.

2. Developing Smart Branch with various services to

facilitate customers’ needs.

3. Increasing transactions using the Electronic Channel.

4. Providing Digital Solution Application that allows

customers to perform digital payment transactions.

5. Establishing BTN Zone in several universities

to encourage cashless society in the millennial

generation.

As a banking institution with focus on housing finance,

We still have to face some challenges, particularly the

increasing demand for housing because there are still

many low-income communities (MBR) that are unfit to

get credit (unbankable); regulatory and licensing issues;

and the increasing competition with other banks related

in terms of mortgages. To face these challenges, We

have implemented various strategies, including:

1. Focusing on providing service to MBR.

2. Improving services with digital banking, one of which

by presenting the portal property.

3. Enhancing the skill and soul of HR marketing.

4. Collaborating with Regulators and Government

to facilitate the permit to build houses and

buildings, through the provision of rewards to Local

Governments that provide the best service.

5. Collaborating with National Defense Agency (BPN) on

how to use unproductive land into housing.

6. Planning to develop multifinance.


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Banking support holds a strategic role in national

economic growth. Therefore, We, as one of the State-

Owned Banks constantly provide economic benefits to all

Company’s stakeholders by continuing to create positive

business growth. In 2017, We succeeded in recording

the current year earnings of Rp3,027,466 million, which

experienced an increase of 15.60% from 2016, which

was Rp2,618,905 million. With the increase, We directly

improve the economic benefits to all stakeholders

(shareholders, employees, suppliers, the Government,

and the community) through the distributed economic

value of Rp19,654,406 million, which increased by 14.93%

compared to 2016, i.e. Rp17,100,730 million.

In 2017, We also developed the economic community of

Tourism Village of Pottery Industry Center by establishing

Karanganyar Village Economic Center (Balkondes), a

tourism-based platform to improve the local economy

and empower and develop the Human Resources

through the activities development in the surrounding

area. This creates a positive economic impact on the

Karanganyar Village economy, i.e. the development of

skills for pottery artisans through coaching and training

in order to increase economic income for the people of

Karanganyar Village.

As a Bank who is very concerned with sustainability, We

also focus on the housing construction by empowering

and relying on local products (domestic products) as

building materials. This becomes our solid commitment

to supporting the economy of domestic companies.


As the implementation of sustainable finance, We have

implemented a commitment to managing environmental

risks through the application of environmentally

friendly credit. As a bank with a business focus in the

Housing Loan sector, We do not finance the mining,

forestry, power generation, and other similar sectors

that have a significant effect on the environment. In

lending to developers, We put our attention on the

results of Environmental Impact Assessment (AMDAL).

Furthermore, We also conduct monitoring or review

through direct filed inspection to ensure that the

prospective debtors meet all relevant environmental

regulations. In addition, We also require that with every

house that we build, there must be reforestation, planting,

fasum (public facilities), and fasos (social facilities).

In banking operations, We also do our best to preserve

the environment. In 2017, We participated in the Earth

Hour campaign and managed to save electricity usage

of 61.9 kWh/hour. We are continuously managing waste

by the Sewage Treatment Plan (SWP) method and

continuously conducting wastewater measurements at

the Head Office to ensure that the waste generated is still

below the quality of standard. We have a commitment

to saving paper as paper is the main material that

supports the banking operations. We innovate through

the iflow application, a correspondence application that

is distributed directly online.



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In line with our business transformation program, we

are strengthening our human resources as agents

of transformation. In 2017, we have increased the

competence of 10,245 employees through a training

program that is divided into three school programs, i.e.

School of Leadership, School of Operation Banking and

School of Business Banking with average training hours

of 22.17 hours training/participants.

We have implemented the equality principles for all

human resources management stages, i.e. employee

recruitment, training programs, employee competence

development, employee career development,

remuneration, and employees welfare, regardless of

gender, religion, ethnicity, race and other diversity. We also

prove our commitment to improving employees’ welfare,

e.g. the salary of an entry-level employee is always above

the minimum wage applied by the Government. Our ratio

is 1.45. In 2017 We have also issued a pension fund of

Rp35 billion.

In line with good human resource management, our

Employee Engagement Survey in 2017 resulted in a

78% score, which is above the moderate zone and

above the average score of 65% for engagement survey

in Indonesia. This indicates that the level of employee

engagement with the Company is quite high.

To improve the accessibility of financial services to

reach all levels of society to reduce gap levels, We play

an active role in supporting government programs for

strengthening financial inclusion. We provide inclusive

and sustainable banking products through TCASH-BTN

Cermat Service, provides mortgage facilities for informal

workers (BTN Housing Loan for Gojek Partners and BTN

Micro Housing Loan for associations and communities).

The Company also develops Micro, Small, and Medium

Enterprises (MSMEs) through KUMK and KUR (People’s

Business Credit) schemes, digital banking services

development, and various financial literacy programs.

In 2017, we have conducted Property Entrepreneurship

Literation Training, which is human resource

development especially developer, through Housing

Finance Center (HFC). The purpose of this program is to

provide education about the ins and outs of the property

world, from capital, regulation, credit applications, to

the challenges and opportunities of building a property

business. With the program’s implementation, We

recorded a World Record Museum Indonesia (MURI)

record as an organizer as well as a pioneer of property

entrepreneurship literacy with the most participants in

Indonesia, i.e. 12,000 participants from 25 Universities

throughout Indonesia.


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Our other commitment to the achievement of

sustainable development objectives is in the sector

of quality improvement and community welfare. We

implement this through Partnership and Community

Development Program (PKBL) and Corporate Social

Responsibility (CSR) Program. In 2017, We have

disbursed Rp26.14 billion for PKBL program and Rp5.15

billion for CSR program. In 2017, through ‘BUMN Hadir

untuk Negeri (SOEs for the State)’, We implement the

Student Mengenal Nusantara (Students Understand

the Indonesia Archipelago or SMN) program, which is

an information and cultural exchange initiated by the

Ministry of SOEs. We also carry out the BUMDES and

Agriculture Entrepreneurship Programs.


We recognize that amidst the many achievements and

the best performance that we conducted, there are still

many challenges to overcome. We are confident that we

will be able to face these challenges with the synergy,

i.e. the cooperation and collaboration between the

stakeholders.

On behalf of Company’s Management and employees,

We would like to extend our gratitude and appreciation for

the support of all stakeholders who have supported the

business success in order to contribute optimally to the

national economic growth. As a form of our commitment,

We shall use this report as a continuous learning process

media and continuous dialogue process.

President DirectorPT Bank Tabungan Negara (Persero) Tbk

MARYONO



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This Sustainability Report is the eighth report published since 2009. The compilation of this report has followed the latest sustainability reporting standard, i.e. the GRI Standards, which is deemed as the best practice in global business practices.

04 ON THE SUSTAINABILITY REPORT


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Welcome to PT Bank Tabungan Negara (Persero) Tbk.(hereinafter referred to as the Company) Sustainability Report 2017. This report discloses the performance, policies, strategies, initiatives, and impacts of the Company’s operations on the sustainability aspects, i.e. economic, environmental, and social as the form of Company’s contribution to support the achievement of Sustainable Development Goals.

PERIOD, BOUNDARY, AND STANDARD OF REPORT COMPILATION

This is eighth report that the Company published regularly since 2009. The previous report is issued in February 2017. In line with the previous reports, this report discloses the Company’s performance and sustainability impacts during the period of January 1 to December 31, 2017, and is an integral part of the Bank BTN Annual Report 2017. [GRI 102-50, GRI 102-51, GRI 102-52]

This report covers the Company’s operational activities both at the head office and throughout the Company’s branch offices throughout Indonesia, and does not cover the operational activities of outsourcing, business partners, and suppliers who are beyond the control of the Company. In principle, there is no significant change in the sustainability boundary and scope with the previous year’s Sustainability Report. Therefore, there is no restatement of the previous year’s information. [GRI 102-45, GRI 102-48, GRI 102-49]

The report is compiled in line with the ‘Core’ Option of GRI Standards. This is the latest international standard for sustainability reporting, issued by the Global Reporting Initiative (GRI). As an additional information, the report also uses Financial Services Sector Supplement. In this report,

the relevant GRI Standards is disclosed on each related page in brackets to facilitate the readers in finding the applied GRI Standards. The complete GRI Standards disclosure lists can be found in “Cross Reference of ‘Core’ GRI Standards and Supplements from the Financial Services Sector” in page 138 on this report. [GRI 102-54, GRI 102-55]

THE PROCESS OF DETERMINING REPORT’S CONTENT

The process of determining the content of this report is made in accordance with the principles of sustainability reporting formulated by GRI, which includes: [GRI 102-46]1. Stakeholder Inclusiveness: The Company has identified

the Company’s stakeholder groups and their respective expectation and interest related to the Company’s business activity.

2. Sustainability Context: This report disclosed the Company’s performance and impacts in the sustainability context, which covers economic, social, and environmental aspects.

3. Materiality: This report disclosed the Company’s economic, social, and environmental impacts, which are relevant to the impact of Company’s business activity, and significant in the evaluation and decision-making of the stakeholders.

4. Completeness: This report disclosed all material sustainability aspects and the boundary comprehensively. Thus the stakeholders may evaluate the Company’s sustainability performance within the reporting period.



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PROCESS OF DETERMINING MATERIAL TOPIC AND BOUNDARY

The process of determining material topics and the boundary of sustainability report is conducted by analyzing the materiality. Materiality analysis is the process of determining material topics relevant to the Company’s business activities, and the material topics influence and impact the stakeholders significantly. The Company has mapped the material topics in the table and graph of materiality, as follows:

Material Topics and Boundary of the Report [GRI 102-47, 103-1]

Material Topics Disclosure Why the Topic is MaterialBoundary

Company Outside the Company

Economy

Economic Performance GRI 201-1, GRI 201-3, GRI 201-4

Have significant impacts on the stakeholders

MarketExistence GRI 202-1 Have significant impacts on the employees

Indirect Economic Impact GRI 203-1, GRI 203-2 Have significant impacts on the stakeholders

Procurement Practice GRI 204-1 Have significant impacts on the suppliers

Anti-Corruption GRI 205-2 Have significant impacts on the development

Environment

Material GRI 301-1 Have significant impacts on the sustainability

Energy GRI 302-1, GRI 302-4 Have significant impacts on the sustainability

Water GRI 303-1 Have significant impacts on the sustainability

Waste GRI 306-2 Have significant impacts on the sustainability

Compliance GRI 307-1 Compliance with Regulation

Social

Employment GRI 401-1, GRI 401-2, GRI 401-3

Have significant impacts on the employees

Occupational Health and Safety GRI 403-2, GRI 403-3 Have significant impacts on the employees

Education and Training GRI 404-1, GRI 404-3 Have significant impacts on the employees

DiversityandEqualOpportunities

GRI 405-1, GRI 405-2 Have significant impacts on the employees

Non-Discrimination GRI 406-1 Have significant impacts on the employees

Freedom of Association GRI 407-1 Have significant impacts on the employees

Child Labor GRI 408-1 Have significant impacts on the employees

Forced or Compulsory Labor Work

GRI 409-1 Have significant impacts on the employees

Local Community GRI 413-1, FS13 Have significant impacts on the community

Marketing and Labelling GRI 417-3, FS16 Have significant impacts on the customers

Customer’s Privacy GRI 418-1 Have significant impacts on the customers

Economic Social Compliance GRI 419-1 Compliance with Regulation

Products Portfolio FS2, FS3, FS6, FS7 Have significant impacts on the customers


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As a result of the Materiality Assessment, the material topics are prioritized into three levels, i.e. High, Medium, and Low, as shown in the following graph.

Grafik Materialitas [GRI 102-47]

Low Medium High

HighM

edium

Stak

ehol

der

Low

Company

Economic Performance

Education and

TrainingLocal Community

Market Existence

Employment

Products Portfolio

Customer’s Privacy

Diversity andEqual

Opportunities

Indirect Economic Impact

Economic Social Compliance

Anti-CorruptionEnvironment Compliance

Marketing and Labelling

Non-DiscriminationFreedom of

Association

Forced or Compulsory LaborWork

Child LaborEnergy

Procurement Practice

MaterialOccupational

Health and Safety

WasteWater

Corporate Secretary Division Bank BTN [GRI 102-53]

Menara BTN Lantai 20Jln. Gajah Mada No. 1Jakarta Pusat, 10130Telp : (021) 6336789 ext. 2003Fax : (021) 6336719Email : [email protected]



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AssurAnce Independent

In this year’s Sustainability Report, the Company reappointed independent assurer Moores Rowland to carry out assurance on the Bank BTN Sustainability Report 2017, thus increasing the credibility and ensuring that the report is free from material faults and is prepared in accordance with GRI Standards. The Company has no other cooperative relationship with Moores Rowland beside the assurance work of Bank BTN Sustainability Report 2017. The process to appoint Moores Rowland as an independent assurer is conducted through the approval of the Company’s Board of Directors, which is represented by the Corporate Secretary. Independent assurer report on Bank BTN Sustainability Report 2017 is presented on page 136 [GRI 102-56]

CONTACT US

To improve the quality of the Bank BTN Sustainability Report for the upcoming period, we invite all readers and stakeholders to submit suggestions, ideas, criticisms, and responses via the Feedback Form located at the end of this report or by contacting:


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STATEMENT FROM BOARD OF COMMISSIONERS AND BOARDOF DIRECTORS ON ACCOUNTABILITY OVER SUSTAINABILITY REPORT2017 PT BANK TABUNGAN NEGARA (PERSERO) TBK.

We, the Board of Commisioners and Board of Directors of PT Bank Tabungan Negara (Persero) Tbk. have evaluated the contentof this Sustainability Report and declare that the report has contained all sustainability topics that are material for the Companyand Company’s stakeholders. We are accountable for the truth of the contents of this Sustainability Report.

Jakarta, February 2018

I WAYAN AGUS MERTAYASAPresident/Independent Commissioner

MARYONOPresident Director

KAMARUDDIN SJAMIndependent Commissioner

IMAN NUGROHO SOEKODirector

ARIE COERNIADIIndependent Commissioner

ADI SETIANTODirector

LUCKY FATHUL AzIz HADIBRATAIndependent Commissioner

ONI FEBRIARTO RAHARDJODirector

BOARD OF COMMISSIONERS BOARD OF DIRECTORS


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GARUDA WIKOIndependent Commissioner

BUDI SATRIADirector

SUMIYATICommissioner

R. MAHELAN PRABANTARIKSODirector

MAURIN SITORUSCommissioner

NIxON L.P. NAPITUPULUDirector

IMAN SUGEMACommissioner



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PT Bank Tabungan Negara (Persero) Tbk. is a State-Owned Enterprise (SOE) who conducts business in the field of banking service provider. The Company was established under the name Postpaarbank in 1897, which later in 1950 is changed to “Bank Tabungan Pos” by the Government of the Republic of Indonesia. In 1963, the Company changed its name to Bank Tabungan Negara. Later on, in 1974, the Company was selected by the Government to be the only institution to disburse Housing Loan (KPR) for lower middle class. [GRI 102-1]

To provide better service for the customers and to accelerate their business performance, the Company has 5,750 conventional offices, 68 sharia offices, 1,964 ATM, and is connected to 2,024 Post Office throughout Indonesia.

10,360 employee

Employees throughout Indonesia

68Sharia Offices

5,750Conventional Offices

05 ABOUT THE COMPANY

7,470,025Total Number of Account


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SIGNIFICANT CHANGES TO THE COMPANY [Gri 102-10]

To implement the transformation in the digital age and in line with its business needs, the Company conducts organizational effectiveness study by observing the company’s organizational structure design and adjusts it to the business needs. It is expected that with this change in organizational structure, the Company can further optimize and utilize strategic functions.

Furthermore, in 2017 there was also a change in the composition of shareholders. Public share ownership increased from 39.39% in the previous year to 40.00% this year, due to the 0.61 buyback of the employees’ shares, which was subsequently released back to the public. Consequently, the Company’s composition of shareholders in 2017 consists of 60.00% Government and 40.00% Public that’s divided into 10.05% Domestic and 29.95% Foreign.

Certifications and Awards in 2017 [Gri 102-12]

INTERNATIONALAWARDS

DECEMBERThe Company obtained Gold Award on the Asset Corporate Awards 2017 for Corporate Governance and Investor Relations Category from The Asset Benchmark Research.

DECEMBERThe Company win Asean GRC Awards from Enterprise Risk Management Academy (ERMA).

NATIONALAWARD

SEpTEMBER 15, 2017The Company obtained Indonesia Banking Award on The Best Bank In Retail Banking Services Category from Tempo Magazine.

SEpTEMBER 15, 2017The Company obtained Indonesia Banking Award on The Best Bank In Digital Services Category from Tempo Magazine.

SEpTEMBER 15, 2017The Company obtained Indonesia Banking Award on The Most Efficient Bank Category from Tempo Magazine.

AuGuST 11, 2017The Company obtained REALESTATE Award on The Bank with the most Housing Loan Disbursed Category from Indonesia Housing Magazine, Indonesia Kreatif Magazine, and DPD ReiJakarta.

AuGuST 23, 2017The Company obtained Anugerah Perbankan Indonesia on Best Limited Liabil ity Company in Indonesia Category from Economic Review Magazine.

SEpTEMBER 15, 2017The Company obtained Indonesia Banking Award on Best Syariah Business Unit Category from Tempo Magazine.

JuLy 27-28, 2017The Company win The Best Sharia Business Unit on IAEI Award from Ikatan Ahli Ekonomi Islam (IAEI).

MARCh 24, 2017The Company obtained PR Indonesia Awards for the Category of Media Relations, Sub-category of Limited Liability Company, State-Owned Enterprises from PR Indonesia Magazine.

JuNE 13, 2017The Company obtained Investor Award on the Highest Asset Growth Category in the Last 5 Years from Investor Magazine.



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OCTOBER 17, 2017The Company obtained Properti Indonesia Award on The Leading In Home Loan Bank Category from Property Magazine.

OCTOBER 17, 2017The Company obtained at Indonesia Property And Bank Award on Bank with the biggest Housing Loan Market Share Category from Property Magazine.

NOvEMBER 27, 2017T h e C o m p a n y o b t a i n e d I I C D Corporate Governance Conference And Award on Top 50 of the Biggest Market Capitalization Public Listed Companies Category from IICD (Indonesian Institute For Corporate Directorship).

NOvEMBER 27, 2017The Company obtained IICD Corporate Governance Conference And Award on Best Financial Sector Category from IICD (Indonesian Institute For Corporate Directorship).

SEpTEMBER 29, 2017The Company obtained WartaEkonomi Indonesia Corporate PR Award 2017 on The Most Popular Company Category from WartaEkonomi.

SEpTEMBER 29, 2017The Company obtained WartaEkonomi Indonesia Corporate PR Award 2017 on The Most Popular CompanyInAsiaCategoryfromWartaEkonomi.

SEpTEMBER 15, 2017The Company obtained Indonesia Banking Award on Best Bank In Productivity Category from Tempo Magazine.

SEpTEMBER 20, 2017The Company obtained 2nd Rank at Annual Report Award on Listed Financial State-Owned Enterprises Category from Indonesia Financial Services AuthorityThe Company obtained 2nd Rank at Annual Report Award on Listed Financial State-Owned Enterprises Category from Indonesia Financial Services Authority


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MARCh, 2017The Company obta ined Mens Obsession Award on The Best CEO Of The Year from Mens Obsession Magazine

AuGuST 11, 2017The Company obtained Real Estate Award on Best CEO Category from Indones ia Hous ing Magaz ine , Indonesia Kreatif Magazine, and DPD ReiJakarta

AuGuST 23, 2017The Company obtained Anugerah Perbankan Indonesia on The Best CEO Bank Category from Economic Review Magazine

PERSONALAWARD

OCTOBER 17, 2017The Company obtained Property & Bank Award on The Most Favorite Leadership Category from Property Magazine

SEpTEMBER 29, 2017The Company obtained Corporate PR AwardofWartaEkonomiIndonesia2017 on The Best PR For CEO CategoryfromWartaEkonomi.

SEpTEMBER 29, 2017The Company obtained Corporate PR AwardofWartaEkonomiIndonesiaon The Most Popular CEO Category fromWartaEkonomi.



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CERTIFICATION

The Company obtained ISO 9001:2008 Mortgage Processing (Non-Subsidized Housing Loan and Non-Subsidized Apartment Loan Ready Stock) from Application to Loan Disbursement Certification, receipt by Non Subsidized Mortgage & Consumer Lending Division by Period of Validity at September 15, 2018 from SGS Indonesia.

The Company obtained ISO 9001:2008 Risk Management ServicesCertification, receipt by Risk Management Division, by Period of Validity at September 15, 2018 from SGS Indonesia.

The Company obtained ISO 9001:2008 Compliance Assurance Services Certif ication, receipt by Compliance Division, by Period of Validity at September 15, 2018 from SGS Indonesia.

The Company obtained ISO 9001:2008 Internal Audit Services (General, Syariah, and IT Audits) Certification, receipt by Internal Audit Division, by Period of Validity at September 15, 2018 from SGS Indonesia.

24 LAPORAN KEBERLANJUTAN 2016 | PT BANK TABUNGAN NEGARA (PERSERO) TBK.

BANK BTN MENJALIN SINERGI MENGUKIR PRESTASI MEMBANGUN NEGERI

SERTIFIKASI

ISO 9001:2008Sertifikasi Internal Audit Services (General, Syariah and IT Audits), Unit Kerja Penerima Internal Audit Division, Pemberi Sertifikasi SGS Indonesia Masa Berlaku s.d: 11 Agustus 2017.

ISO 9001:2008Sertifikasi Risk Management Services, Unit Kerja Penerima Risk Management Division, Pemberi Sertifikasi SGS Indonesia Masa Berlaku s.d: 15 September 2018.

ISO 9001:2008Sertifikasi Mortgage Processing (KPR and KPA Non Subsidi Ready Stock) from Application to Loan Disbursement, Unit Kerja Penerima Non Subsidized Mortgage & Consumer Lending Division, Pemberi Sertifikasi SGS Indonesia Masa Berlaku s.d: 15 September 2018.

ISO 9001:2008Sertifikasi Compliance Assurance, Unit Kerja Penerima Compliance Division, Pemberi Sertifikasi SGS Indonesia Masa Berlaku s.d: 15 September 2018.



SERTIFIKASI







SERTIFIKASI






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cErtiFication

iSo 9001:2008

intErnal audit

SErvicES



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BANK BTN BRIEF HISTORY

1897The Company was established under the name “Postspaarbank” during the Dutch Era.

2012The Company e x e c u t e d Right Issue.

1950Name changed to “Bank Tabungan Pos” by the Government of the Republic of Indonesia.

1989Started operating as commercial bank and issued first bond.

2009The Company did an Initial Public Offering (IPO) and listing on Indonesia Stock Exchange.

2013Bank BTN transformed into the leading housing bank and world class banking.

1994Obtained a license to operate as Foreign Exchange Bank.

2015Bank BTN participated in One Million Houses Program for the People.

Easier with BTN Properti Portal, Source: Aulia Ichsan


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1974Appointed by the government as the only institution to disburse Housing Loan (KPR) for middle lower class.

2002KPR securitization through the first Asset Backed Security Collective Investment Contract (KIK EBA) in Indonesia.

2016The Company is continuing its transformation agenda to strengthen its growth base by staying focused on strengthening the housing business with service speed, technological improvements, credit approval speed, and human capital optimization as well as business development through the addition of various service products and the development of digital-based banking services.

2017The Company was in the digital banking transformation period, and has developed various digital-based products and services, such as mobile BTN, internet banking, and cash management.

1963Name changed to Bank Tabungan Negara.

2009Designated as a commercial bank focuses on commercial house financing.

BTNDigitalSolution,Source:SusiloWaluyo



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SIGNIFICANT EVENTS IN 2017

JANuARyOPTIMISTIC IN 2017, THE COMPANY PRIORITIzES DIGITAL-BASED BUSINESSInCorporateWorkPlanandBudget(CBP)2017,theCompanyprioritizesthedigital-based business transformation to support its core business in order to encourage the One Million Houses Program.

FEBRuARyTHE COMPANY RELEASED BTN MICRO HOUSING LOANConsistent in its role to support the One Million Houses Program launched by the Government, the Company released BTN Micro Housing Loan product.

MARChDIVIDEND PAYMENT TO SHAREHOLDERSIn the Annual General Meeting of Shareholders (GMS) for 2016 fiscal year, the Company approved 20% dividend from the net profit, or amounting to Rp523.8 billion.

ApRILINAUGURATION OF E-RETRIBUTION IN COOPERATION WITHTHESOLOGOVERNMENTATKLEWERMARKETTheCompanyexpandstheimplementationofelectronicretributionsystemore-retribution at Klewer Market, after a success in Gede Market.

SIGNINGOFCOOPERATIONAGREEMENTWITHIPWThe signing of Cooperation Agreement between the Company and Indonesia PropertyWatch(IPW)relatedtotheBTNGoldenPropertyAwards.


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JuNETHE COMPANY ISSUED RP5 TRILLION OF BONDSThe Company issued the first phase of ‘Obligasi Berkelanjutan III Bank BTN (Continuous Bonds III)’ of 2017 worth Rp 5 trillion, issued in 4 series.

MAyCOMPANY PREPARES CHEAP HOUSES FOR INFORMAL WORKERSTOSUPPORTONEMILLIONHOUSESThe Company again provides low-cost housing for low-income communities (MBR) to be built on a 105-hectare land in Cikarang Bekasi.

THE COMPANY LAUNCHED MOBILE APPLICATION FOR

NADHATULULAMAWAqFPAyMENTThe Company strengthens its commitment to support the One Million Nahdliyin Waqf Movement (Gerwaku Sena), pioneered by Nadhatul Ulama (NU) bylaunchingthemobileapplicationtopaywaqf.

AuGuST

THE COMPANY HELD FLAG CEREMONY AT SOEKARNO MUSEUM, LIMBOTO LAKEThe Company held a Flag Ceremony at the Soekarno Amphibious Aircraft Landing Museum in Gorontalo District, and handed over 6 units of boats to MSME of Gorontalo Regency and rehabilitation assistance of 2 homestay houses in Desa WisataBahari(MaritimeTourismVillage),eachvaluedatRp100million.

IPEXCLOSING,THECOMPANyBOOKEDNEWHOUSINGLOANSAt the closing of IPEX 2017, the Company managed to book new housing loans worth Rp8.36 trillion, surpassing the Company’s target.



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OPENING OF THE COMPANY BRANCH OFFICE IN SUKABUMIWiththeopeningoftheCompanySukabumiBranchOffice,itisexpectedthatall the locals’ needs related to banking services can be served by the Company.

SEpTEMBERTHECOMPANyWINS5AWARDSINIBA2017The Company won 5 awards in the IBA 2017, including The Most Efficient Bank, The Best Bank in Digital Services, The Best Bank in Retail Banking Services, The Best Sharia Business Unit and Best Bank in Productivity.

THECOMPANyINAUGURATESREGIONALOFFICEOFJAKARTABANTENRegionalOffice2 JakartaBantenofficiallyopenedto improvemonitoringandmanagement of the Company customers, especially for those around the area.

OCTOBERUNIVERSITY OF NORTH SUMATERA (USU) COLLEGE STUDENTS WELCOMETHESOEPROGRAMSONCAMPUSUSU College Students welcomed the SOE Programs on Campus with open arms. The program is initiated by Ministry of SOEs. The speakers were the Company’s PresidentDirectorMaryono,ExpertStaffofMinisterofSOEs,SalahaLumbanGaol,andPresidentDirectorofKrakatauSteelMas,Wigrantoro.

NOvEMBERBTN TOUR DE BOROBUDUR XVIIThe Company also participated to conserve the environment and encourage theeconomyofCentralJava.Forevery1kilometertraveledbyparticipants,theCompany will donate funds in the amount of Rp 1,000 This sports tourism was participatedbynearly6,000participantsincludingCentralJavaGovernorGanjarPranowo.

MOUBETWEENTHECOMPANyWITHDONGBUSAVINGSBANKThe Company’s President Director and the President of World Savings BankInstitute (WSBI) Asia Pacific Region, and Vice Chairman & CEO of DongbuSavings Bank signed the MoU related to global partnership strengthening.


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DECEMBEROPENING OF THE COMPANY BRANCH IN PEMATANG SIANTARThe Company inaugurates the Branch Office in Pematang Siantar to pursue the potential of KPR and Tourism in the region.

41ST ANNIVERSARY OF BTN HOUSING LOANThe Company held the 41st anniversary of BTN Housing Loan themed “Dedication and Synergy to Achieve Dream Homes for Millions of Indonesian Families”.

MOUSIGNINGWITHJEMBERREGENCyAnMoUwassignedbetweenPresidentDirectorof theCompanyand JemberRegent.The Company plans to build Puger Fishermen Village with the support ofJemberGovernmenttoattaintheOneMillionHouseProgram.

THECOMPANyESTABLISHESCOOPERATIONWITHTELKOMSELTO PRESENT CONNECTED FINANCIAL SERVICESThe partnership was held to increase financial inclusion and support the synergy between SOEs. With this partnership, customers of BTN Cermat from LakuPandai BTN can transfer their balance to Telkomsel’s e-money TCASH account and vice versa.

THE COMPANY HOLDS EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS (EGMS) IN 2017In the year’s EGMS, the Company decided to appoint Dasuki Amsir as Director of BTN, as stipulated in the agreement.



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COMPANY’S VISION, MISSION, AND CORPORATE CULTURE [GRI 102-16]

CORpORATE CuLTuRE

MISSION1. To provide excellent service in housing finance and the industry related,

consumer finance, as well as small-middle enterprises finance; 2. To increase competitive excellences through innovative product development,

services, and the latest technology-based strategic network; 3. To prepare and develop qualified and professional Human Capital of high

integrity; 4. To perform banking management in accordance with prudence principle and

Good Corporate Governance to increase Shareholder Value; 5. To care for public’s needs and environment

Synergy

Integrity

Professionalism

Spirit to Achieve Excellence

Innovation

“TO BE THE LEADING BANK IN HOUSING FINANCE”

vISION


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Consistency in mind, manner, matter, in line w i t h t h e Co m p a n y ’s r u l e s , c o d e o f professional conduct, and commendable principle of truth.

Visionary, competence i n t h e f i e l d , a l w a ys developing itself with the latest technology so it will yield best performance.

Constantly developing new idea and continuous refinement to improve added va lue of the Company.

Building a synergistic cooperation with every stakeholders sincerely, openly, and to encourage productive collaboration with mutual trust and respect to achieve mutual goals.

Shows enthusiasm and strong commitment to achieve the best results a n d p rov i d e s e r v i ce s that exceed customerexpectations(internalandexternal) by enunciatingthe importance aspect of qualityineveryactivitiesaswell as the calculated risk

SyNERGy SpIRIT TO AChIEvE EXCELLENCE

pROFESSIONALISMINNOvATIONINTEGRITy

Each Corporate Cultural Values has 2 (two) Top of Conducts as a reference for every Company’s personnel. Those ten main points of behavior are:

SYNERGY

INTEGRITY

INNOVATION

PROFESSIONALISM

SPIRIT TO ACHIEVE ExCELLENCE

1. Sincere, Open, and Productive Collaboration2. Mutual Trust and Respect

3. Consistency and Discipline4. Honest and Dedicated

5. Responding to Change6. Creative & innovative in perfecting value-added enhancements

7. Competent, Entrepreneurship, and Responsible8. SmartWorkingandResultOriented

9. Enthusiastic, Proactive, and Unyielding10. Effective, Efficient, and Prioritizes Customer Satisfaction



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COMPANY’S BUSINESS ACTIVITIES [Gri 102-2]

HOUSING LOAN AND CONSUMER BANKINGproducts: 1. Consumer Credit consists of 4 types, i.e. Subsidized Housing Loan, Non-

Subsidized Housing Loan, other Housing-Related Loan, and Consumer Credit.

2. There are three types of savings, i.e. Demand deposit, savings, and Deposit

Services: 1. Mortgage: House or residential financing services2. Consumer Loan:

i. Consumer and Personal Funding servicesii. Consumer loan business development from housing value chain

3. Consumer Funding:i. Fund product and services for individual customersii. Wealth Management Business development

HOUSING AND COMMERCIAL BANKINGproducts: 1. Commercial Credit is divided into three, i.e. Construction Loan, Micro Credit,

and Small Medium Enterprises and other Cooperatives Loan 2. Savings is divided into Demand deposit, and Deposit

Services:1. Commercial Loan: Commercial loan business, including construction loan2. SME: Financing for small micro enterprises segment3. Commercial & Institutional Funding: Fund product and services for corporate

and institutional clients

Based on the GMS Resolution Deed on Articles of Association of PT Bank Tabungan Negara (Persero) No. 51 dated March 24,2015,theCompanyconductsbusinessactivitieswiththesummary.Furtherdetailexplanationoftheproductsorservices can be referred to on the Company’s Annual Report 2017.


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Sharia Banking

products: 1. Financing products are divided into two, namely Sharia Consumer Financing

and Sharia Commercial Financing2. Funding products are divided into three, i.e. Sharia Demand Deposit, Sharia

savings and Sharia Deposits

Services:Sharia Business Unit: Sharia products and services that create the Company’s business synergy

TREASURY & ASSET MANAGEMENT1. Treasury product and services2. DPLK business management

Digital ChannelDopo Lastiyomo

SubsidizedMortgage

Hirwandi Gafar

CommercialFunding

& ServicesAnton Rijanto

Risk ManagementCommittee Product Committee

BranchesPriority Banking

WealthManagement

Sri Rezeki MurniSudarsari

Corporate and LoanSyndication

Sindhu RahadianArdita

CommercialLending

AlexSofyanNoor

Non-SubsidizedMortgage &

Consumer LendingSuryanti

Agustinar

Service Quality &Distribution

Ferry Sipahutar

Retail Funding &Services

Nasril

Small MediumEnterprise Lending

Heru Kurniawan

DirekturDistribution &

NetworkDasuki Amsir

Direktur ConsumerBanking

Budi Satria

DirekturCommercial

BankingOni Febriarto

Rahardjo

Sharia Supervisory Board

Regional Offices

ShariaMarisa Gemiralda

ShariaBranches

Facing the increasingly competitive business climate and competition, the Company continuously performs strategic measures in various field to conduct more effective and efficient bank operations. In line with the Company’s business transformation, the Directors has made adjustments to the organization structure in order to execute the business initiatives and operational process more effectively. On May 29, 2017, Directors has stipulated the Amendment to the Directors’ Resolution Number: 04/KD/DIR/SIPD/2017 on Head Office Organization Structure, with the prior approval of the Board OF Commissioners.

Line of CommandLine of Communication/Information



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COMPANY’S ORGANIzATION STRUCTURE [Gri 102-18]

Board of Commissioners

InternalAudit

Triani PudjiAstuti

AuditCommittee

Corporate Strategy& PerformanceManagementBeki Kanuwa

TreasuryNofry Rony

Poetro

IT StrategicPlanning &

DevelopmentPurwa Riadi

Retail RiskErwin DwiKusuma

Enterprise RiskManagement

SahatSihombing

Procurement &General Services

R. AchmadZeinW

Legal DivisionYossi Istanto

Credit PolicyCommittee

CreditCommittee

Human CapitalCommittee

IT SteeringCommittee

Asset LiabilityCommittee

Policy &Procedure

Adi SuhartoAtmadja

CreditOperation

Rudolf ValentinoSaragih

AssetManagement

Elisabeth NovieRiswanti

CommercialRisk

Hertanta

IT OperationBimo HaryoPrawiro P

Finance andAccountingDadang Eka

Jatnika

TransformationManagement

OfficeWilsonArafat

CorporateSecretary

AgusSusanto

Remuneration& Nomination

Committee

Compliance &Governance

Sudaryo BagyoUtomo

InstitutionalBanking

Adi SantosoBudi Darma

Operation &Business SupportAdee Indriana D

ConsumerCollection &

RemedialMarfiades

Risk MonitoringCommittee

Direktur Collection Asset Management

& LegalNixonL.P.Napitulu

Direktur Finance & Treasury

Imam Nugroho Soeko

Direktur Strategy,Compliance &

RiskR. Mahelan

Prabantarikso

Direktur IT and Operation

Adi Setianto

Shareholder Meeting

Direktur UtamaMaryono

HC Manegement& CultureSpecialist

EkoWaluyo

HC OrganizationDevelopment &

PolicyAchmad

Noorrachman

LearningCenter

Rifki Sengaji

MD StrategicHuman Capital


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COMPANY’S SHAREHOLDING [Gri 102-5]

60,00%GOVERNMENT

29,05%

FOREIGN

40,00%PUBLIC

10,05%

DOMESTIK


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OPERATIONAL AREA AND MARKET SHARE [GRI 102-3, GRI 102-4, GRI 102-6]

2

31

Sumatera

Regional Offices 1Branch Office 12Sub-branch Office 44Cash Office 61Sharia Outlet 10Priority Outlets 6Post Office 700ATM 256

Java

Regional Offices 3Branch Office 45Sub-branch Office 185Cash Office 368Sharia Outlet 53Priority Outlets 26Post Office 1,627ATM 1,437

Kalimantan


Bali dan Nusa Tenggara



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4

5

6

Established since 1897, the Company headquarter is located at Jalan Gajah Mada No. 1 Jakarta. The Company has office networks spread throughout Indonesia

Sulawesi

Regional Offices 1Branch Office 6Sub-branch Office

16

Cash Office 21Sharia Outlet 3Priority Outlets 2Post Office 126ATM 103

papua dan Maluku

Regional Offices 0Branch Office 3Sub-branch Office

3

Cash Office 4Sharia Outlet 0Priority Outlets 0Post Office 61ATM 24

Description 2015 2016 2017

Regional Offices 3 4 5Branch Office 65 65 75Sub-branch Office 223 243 275Cash Office 479 477 484Sharia Outlet 50 65 71Priority Outlets 40 40 41Total Outlets 860 894 951Post Office 2,951 2,951 2,954ATM 1,830 1,830 1,964



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COMPANY’S ORGANIzATION SCALE [GRI 102-7]

COMPANY’S SUPPLY CHAIN [Gri 102-9]

Banking operations require the support of goods and services obtained from various types of suppliers and vendors. The Company’s main suppliers include contractor services, planning consultancy services, supervisory consultancy services, other consultancy services, stationery suppliers, stamp duty, expedition and mail services, other consultancy services, appraisal services, security services, cleaning services, outsourcing services, secretarial services,

Description unityear

2015 2016 2017

Total Assets Rp million 171,807,592 214,168,479 261,365,267

Total Equity Rp million 13,860,107 19,130,536 21,663,434

Total Liabilities Rp million 157,947,485 182,828,998 223,937,463

Income for the Year Rp million 1,811,337 2,618,905 3,027,466

Interest Revenue and Net Split Rp million 14,966,209 17,138,819 19,271,582

Conventional Offices Office 3,761 3,780 5,750

Sharia Offices Office 50 65 68

Accounts Million Account 6,655,566 6,861,883 7,470,025

Total Employee People 9,042 9,244 10,360

Permanent Employees People 8,180 8,561 8,780

Contract Employees People 862 683 1.580

Shareholding

- Government of Indonesia % 60.04 60.01 60.00

- Public % 38.96 39.39 40.00

- Employee % 1.00 0.61 -

and archives or documentation. The Company’s suppliers and vendors are dominated by local suppliers.

All of the Company’s suppliers and vendors are required to comply with the procurement policies of the Company, which include compliance the applicable laws and regulations of the Government of Indonesia and Bank Indonesia, especially in respect of human rights and employment practices.


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ASSOCIATION MEMBERSHIP [Gri 102-13]

Association position

Himpunan Bank-Bank Milik Negara (HIMBARA) Chairman 1Institute of Indonesia Chartered Accountants (IAI) General SecretaryWorld Saving Bank Institution (WSBI) Chairman of WBSI Asia - Pacific Regional GroupIndonesian Banks Association (PERBANAS) Vice Chairman 1Forum Humas BUMN (SOE Public Relations Forum) MemberIndonesian Public Listed Companies Association MemberKonsorsium Data Kerugian Eksternal (Indonesian Loss Data Consortium)

Member

Certified Wealth Manager’s Association (CWMA) MemberAsosiasi Sistem Pembayaran Indonesia (ASPI) MemberAssociate Cambiste Internationale (ACI) Indonesia (Forexindo)

Member

Forum Komunikasi Direktur Kepatuhan Perbankan (FKDKP) or Banking Compliance Directors Communication Forum

Member

Lembaga Alternatif Penyelesaian Sengketa PI (LAPSPI)

Member

Ikatan Auditor Intern Bank MemberPerhimpunan Audit Internal Indonesia MemberThe Institute of Internal Auditor (IIA)-Indonesia Chapter

Member



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The Company sees that the implementation of Good Corporate Governance (GCG) is an absolute necessity. The tagline of “moving beyond corporate governance to true business value” is vigorously campaigned by management to all stakeholders, to be an aspiration of the Company in implementing good governance. The Company has a strong belief that the practice of GCG implementation is not just a compliance drive but moreover, GCG is the ultimate secret to long-term success. [GRI 103-2]

The benefits of GCG implementation for the Company are reflected in the achievement of the Company’s performance, both quantitative and qualitative including financial and non-financial, and appreciation from various external parties. Through the GCG implementation, the Company is committed to engaging in the development and growth of Indonesia by contributing significantly to the Indonesian economy and being a role model for other companies in terms of GCG implementation.

06 SUSTAINABILITY GOVERNANCE

The implementation of Good Corporate Governance accompanies the Company’s strategic steps to prioritize the Company’s transformation of the digital banking-based business.


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COMPANY’S GOVERNANCE ROADMAP The Company has set the direction of GCG implementation as outlined in the form of roadmap, as a guideline for GCG implementation at all levels of the organization. Roadmap is directed to make GCG as a reference in conducting operational activities. The Company’s final GCG roadmap

is the realization of the Company with best practices in the future. With the final goal in mind, the Company is expected to maintain and improve its performance in a sustainable manner. Description of the Corporate Governance roadmap stages are as follows:

Company’s Governance Roadmap2017Reinforcing the Foundation

2018upgrading Governance Capability

2019Building Governance Sustainability

2020pursuing Effective Governance

Governance Structure

Preparation and refinement related to financial conglomeration:• Policies and procedures;• Governance Training Program

development;• Governance standard in

accordance with BI/OJK, ASEAN CG Scorecard, Ministry of SOEs, CGPI;

• Preparation of holding regulation for financial conglomeration.

Review and refinement related to financial conglomeration:• Policies and procedures;• Governance Training

Program development;• Governance standard in

accordance with BI/OJK, ASEAN CG Scorecard, Ministry of SOEs, CGPI.

Periodic review of:• Policies and procedures;• Governance Training Program



Periodic review of:• Policies and procedures;• Governance Training Program



Governance Process

• Preparation of policy and procedure revisions;

• Preparation of training modules for governance;

• Establishing the Task Force ASEAN CG Scorecard Team;

• Development of governance applications.


• Preparation of training modules for governance;

• Establishing the Task Force ASEAN CG Scorecard Team;

• Development of governance applications;

• Preparation of sustainable action plans;

• Adjustment of ISO 9001: 2015.


• Identification of improvements for improved governance practices under the ASEAN CG Scorecard;

• Implementation of governance applications;

• Sustainability Report based on the sustainable financial action plan;

• Implementation of ISO 2015;• Internalization of GCG to Holding

Company and Subsidiaries.


• Identification of improvements for improved governance practices under the ASEAN CG Scorecard;

• Implementation of governance applications;


• Implementation of ISO 2015;• Internalization of GCG to

Holding Company and Subsidiaries;

• Evaluation of the efficiency of the governance applications.

Governance Outcome

• Review of the new organizational governance structures;

• Governance Training programme;

• Improved corporate governance score based on BI/OJK Regulator, Regional Third-Party Assessment, SOEs Standard Assessment;

• GCG Composite Value: 2.

• Review of the new organizational governance structures;

• Governance Training programme;


• Sustainable action plans; • GCG Consolidated

Composite Value: 2.



• GCG Internalization;• Governance applicatoin;• GCG Consolidated Composite

Value: 2.

• Sustainablecorporategovernancescore/award;

• DisclosureReportbasedonthesustainablefinancialactionplan;

• GCGInternalization;• Efficiencyofgovernance

applications;• GCGConsolidatedComposite

Value:1.



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COMPANY’S GOVERNANCE STRUCTURE [GRI 102-18]

Pursuant to Law No. 40 of 2007 Article 1, it is stated that the Company’s Organ consists of a General Meeting of Shareholders (GMS), the Board of Directors, and the Board of Commissioners. These three organs of the Company perform their functions in accordance with the prevailing laws and regulations and the Company’s Articles of Association. The basic principle is that every organ has the independence to perform its duties, authorities, and responsibilities for the best interests of the Company. [GRI 103-2]

To support the duties and responsibilities of the Board of Commissioners and the Board of Directors, the Company has established supporting organs that report directly to the Board of Commissioners and Board of Directors. The structure can be seen in the picture below:

Corporate Governance Structure

General Meeting Shareholder

Remuneration and Nomination

Committee

Satuan Kerja Audit Intern

(SKAI)

Satuan Kerja Manajemen

Risiko (SKMR)

Unit Usaha Syariah (UUS)

Satuan Kerja Kepatuhan (SKK)

Dewan Pengawas Syariah (PDS)

Risk Management Committee

Board of Commissioner Secretary

Komite Pemantau Risiko

Komite Pengarah Teknologi Informasi

(KPTI)

Komite Kebijakan Perkreditan

Asset and Liability Committee

Corporate Secretary

Auditor Eksternal

Board of Commissioner

Audit Committee

Board of Director

Unit Kerja Lain

Komite Kredit

Komite Personalia

Komite Produk

MAIN ORGAN

SUPPORTING ORGAN


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GENERAL MEETING OF SHAREHOLDERSGMS is also a forum for Board of Commissioners and Directors to report and be responsible for the duties implementation and performance of the shareholder. Shareholders are not allowed to interfere with the Company’s operations, which is the responsibility of the Board of Directors in accordance with the Company’s Articles of Association and prevailing laws and regulations.

There are two types of Company’s GMS, i.e. Annual GMS (AGMS) and Extraordinary GMS (EGMS). In 2017, the Company held one AGMS and one EGMS. AGMS is held on March 17, 2017, and EGMS is held on December 28, 2017. Every agenda and resolutions of AGMS and EGMS 2017 can be referred to in the Company’s Annual Report 2017.

BOARD OF COMMISSIONERSThe Board of Commissioners is a Company’s Organ that reports directly to the GMS. Board of Commissioners has collective duties and responsibilities to conduct supervision and provide advice to the Board of Directors, as well as to ensure that the Company performs good corporate governance at all level of the organization. In carrying out supervisory duties, the Board of Commissioners may establish committee, whose members are members of the Board of Commissioners. The Committee shall be responsible to the Board of Commissioners. Other provisions concerning the Company’s Board of Commissioners are regulated in Law No. 40 of 2007 on Limited Liabilities Company, and Law No. 7 of 1992 on Banking, State Ministry for State-Owned Enterprises Regulation, Financial Services Authority Regulations (POJK) No. 55, Bank Indonesia Regulation, and the Company’s Articles of Association. [GRI 103-2]

Based on Resume of General Meeting of Shareholders (GMS) of PT Bank Tabungan Negara (Persero) Tbk No. 44/Ket/Not/III/2017 dated March 17, the composition of the Board of Commissioners is as follows:

Composition of the Company’s Board of Commissioners Per December 31, 2017

Name position Gender Tenure

I Wayan Agus Mertayasa President Commissioner/Independent Commissioner Male April 6, 2016 – present

Kamaruddin Sjam Independent Commissioner Male June 29, 2015 – present

Arie Coerniadi Independent Commissioner Male June 29, 2015 – present

Lucky Fathul Aziz Hadibrata Independent Commissioner Male July 27, 2015 – present

Sumiyati Commissioner Female February 22, 2016 – present

Maurin Sitorus Commissioner Male June 6, 2016 – present

Iman Sugema Commissioner Male July 21, 2017 - present

Garuda Wiko Independent Commissioner Male July 21, 2017 - present



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As a realization of continuous learning, Board of Commissioners conducts training and competence development program every year in order to improve the knowledge/competence of Board of Commissioners. This program is held both domestically and abroad.

Training and Competence Development Program for Board of Commissioners in 2017Name Time place Training and/or Competence Development

I Wayan Agus Mertayasa February 16 Jakarta Cyber Security and Integrating Operational Risk With the Mitigation Factors and Digital Payment Seminar: A New Era In the Way We Do Payment

February 9-10 Denpasar ExpandLeadershipprogramforBOD/BOC

May 18-19 Bali Deeper Understanding of IFRS 9 and BASEL IV and Progress of BASEL III Implementation”

July 22-29 Sydney, Australia IIA Conference 2017: “L.I.V.E. the Global Experience: Leadership Innovation. Value. Effectiveness”

September 20-26 London, United Kingdom

Living Wills, Planning for Bank Recovery and Resolution

Ari Coerniadi April 22-30 Europe(Geneva, Prague, and Budapest)

Program International “Risk Culture & Leadership ERM Master Class & Benchmarking In Europe”


October 17-19 Prague, Czech, and Austria

The Internal Capital Adequacy Assessment Process (ICAAP)

Kamaruddin Sjam February 16 Jakarta Cyber Security and Integrating Operational Risk With the Mitigation Factors and Digital Payment Seminar: A New Era In the Way We Do Payment

April 22-30 Europe(Geneva, Prague, and Budapest)

Program International “Risk Culture & Leadership ERM Master Class & Benchmarking In Europe”

September 16-23, 2017 New Zealand Integration of GRC

Maurin Sitorus February 16, 2017 Jakarta Cyber Security and Integrating Operational Risk With the Mitigation Factors and Digital Payment Seminar: A New Era In the Way We Do Payment

February 9-10 Denpasar Expand Leadership program for BOD/BOC

March 23-24, 2017 Four Seasons Hotel Jakarta

Seminar BARa Risk Forum "Refocusing On Credit Risk Management, Credit Risk Model, Pricing & Being Prepared for Upcoming Regulations"

April 22-30 Geneva, Prague Risk Culture and Leadership The Paramount Of GRC


November 21-24 Hongkong Finance for Non-Finance Manager Program

Sumiyati May 18-19 Bali Deeper Understanding of IFRS 9 and BASEL IV and Progress of BASEL III Implementation”


Iman Sugema March 23-24, 2017 Four Seasons Hotel Jakarta

Seminar BARa Risk Forum "Refocusing On Credit Risk Management, Credit Risk Model, Pricing & Being Prepared for Upcoming Regulations"




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Name Time place Training and/or Competence Development

Lucky Fathul Aziz Hadibrata

February 16 Jakarta Cyber Security and Integrating Operational Risk With the Mitigation Factors and Digital Payment Seminar: A New Era In the Way We Do Payment

March 23-24 Jakarta Seminar BARa Risk Forum "Refocusing On Credit Risk Management, Credit Risk Model, Pricing & Being Prepared for Upcoming Regulations"

May 18-19 Bali Seminar BARA Risk Forum

October 17-19 Prague, Czech, and Austria

The Internal Capital Adequacy Assessment Process (ICAAP)

Garuda Wiko March 25 Jakarta Risk Management Competence Certification Level 2 for Commissioner

September 20-26 London, England Living Wills, Planning for Bank Recovery And Resolution

August 2-5 Bali Expand Leadership Program for BOD/BOC

BOARD OF DIRECTORSBoard of Directors is a central and exclusive organ in the Company’s governance. The potential members of the Board of Directors have to undergo a fit and proper test as set forth in Bank of Indonesia Regulation (PBI) No. 12/23/PBI/2010 stating that the potential members of the Board of Directors have to pass the fit and proper test and obtain approval from Bank Indonesia prior to carrying out their official duties and functions, this is also regulated in POJK No. 27/POJK.03/2016 on Fit and Proper Test for Key Parties of Financial Services Agency. The members of the Board of Directors are appointed through a GMS and

through a fit and proper test referring to PBI No. 12/23/PBI/2010 on Fit and Proper Test, Article 17 states that the Board of Directors is required to have integrity, competency, and financial reputation. The dismissal of members of the Board of Directors is regulated in Article 11 of the Articles of Association. [GRI 103-2]

Based on Resume of General Meeting of Shareholders (GMS) of PT Bank Tabungan Negara (Persero) Tbk No. 44/Ket/Not/III/2017 dated March 17, the composition of the Board of Directors is as follows:

Composition of the Company’s Board of Directors Per December 31, 2017

Name position Gender Tenure

Maryono President Director Male March 18, 2013 – present

Iman Nugroho Soeko Director Male June 16, 2014 – present

Adi Setianto Director Male June 8, 2015 – present

Oni Febriarto Rahardjo Director Male May 21, 2015 – present

R. Mahelan Prabantarikso Director Male July 25, 2017 – present

Nixon L.P. Napitupulu Director Male July 25, 2017 – present

Budi Satria Director Male July 25, 2017 – present

Dasuki Amsir Director Male December 28, 2017 – present



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The Board Manual explained that the improvement of competence is considered important to improve the effectiveness of the Board of Directors’ performance. Therefore, the Company always conducts training and competency development programs annually held both domestically and abroad. In 2017, the training and competence development program of the Board of Directors is as follows:

Directors’ Training and Development in 2017

Name and position Time place Competence Development/Training Material Organizer

Maryono(President Director)

April 27-29 Bandung, Indonesia BUMN Executive Leadership Program – 1 (ELP-1)

Ministry of SOEs & Forum Human Capital Indonesia (FHCI)

May 12-13 Bangkok, Thailand WSBI Innovation Workshop Asia

World Savings and Retail Banking Institute (WSBI)

November 22-28 Cape Town, South Africa

Workshop WSBI General Assembly & Conference


Iman Nugroho Soeko(Director)

April 27-29 Bandung BUMN Executive Leadership Program – 1 (ELP-1)


May 18-19 Bali BARA Risk Forum Workshop BARA

Agustus 24-25 Bali Training Corporate Governance Leadership Program (CGLP)

Indonesian Institute Corporate Directorship (IICD)

August 19-29 Frankfurt and Vienna

Intensive Wealth Management and Risk Management Refreshment Programs for Executives

MM UGM, in cooperation with IBI and LSPP

Adi Setianto(Director)



September 11-15 Cambridge, England Asean Global Leaderships SRW & Co

Oni Febriarto(Director)



R Mahelan Prabantarikso(Director)

April 5-6 Jakarta Risk Management Level 5 Certification Training

PT Peak Pratama Indonesia

April 25 Jakarta Risk Management Level 5 Certification Training

LSPP

April 29 Bandung BUMN Executive Leadership Program – 1 (ELP-1)

Ministry of SOEs & Forum HumanCapital Indonesia (FHCI)

August 24-25 Bali Training Corporate Governance Leadership Program (CGLP)

Indonesian Institute Corporate Directorship (IICD)

December 20-21 Rome, Italy ISER Conference 2017 The International Society for Engineers and Researchers (ISER)

Nixon Napitupulu(Director)




LSPP

Budi Satria(Director)




LSPP

April 27-29 Bandung BUMN Executive Leadership Program – 1 (ELP-1)


May 12-13 Bangkok, Thailand WSBI Innovation Workshop: Innovation Hacks ASIA Share Insights and Learn from Your Peers


November 22-28 Cape Town, South Africa

Workshop WSBI General Assembly & Conference



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RISK MANAGEMENT

As a Company that mainly focuses in the field of providing loans and financing housing, the Company’s asset portfolio is dominated by housing loans (KPR) which are affected by changes in the external business climate, such as inflation and BI Interest Rate. Therefore, it is necessary to perform sustainable risk control management under the GCG principles to minimize the negative impacts of these business activities.

• Credit Risk• Market Risk• Liquidity Risk• Operational Risk

• Legal Risk• Strategic Risk• Compliance Risk• Reputational Risk

The Board of Commissioners through the Risk Monitoring Committee and Board of Directors through the Risk Management Committee are responsible for ensuring that Risk Management has been sufficiently implemented and in line with Bank BTN’s risk characteristics, complexity, and profile. The Board of Commissioners and Board of Directors play an active role in the risk management process to mitigate Bank risks through the Risk Management Quality including risk management procedures, risk management framework, risk management process and management information system adequacy as well as the internal control system adequacy. The Company’s Risk Management System is as follow: [GRI 103-2]

Company’s Risk Management System

Risk Management Support & Reporting

Market Risk Management

Credit Risk Management

Operational Risk Management

Strategic Risk Management

Market Risk Policy & Procedure

Credit Risk Policy & Procedure

Operational Risk Policy & Procedure

Policy Quality Assurance

Market Risk Assessment & Measurement

Credit Risk Assessment & Measurement

Operational Risk Assessment & Measurement

Unit Basel

Managing Director Strategic, Compliance

and Risk

Enterprise Risk Management Division

Head

8 Types of Company’s Risks



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The implementation of the Risk Management system at Bank BTN refers to Bank Indonesia Regulation No. 5/8/PBI/2003 on the Implementation of Risk Management for Commercial Banks as amended by Bank Indonesia Regulation No. 11/25/PBI/2009 concerning Amendment to Bank Indonesia Regulation No. 5/8/PBI/2003 on the Implementation of Risk Management for Commercial Banks, Circular Letter No. 5/21/DPNP concerning the Implementation of Risk Management for Commercial Banks as amended by BI Circular Letter No. 13/23/DPNP dated October 25, 2011, on the Amendment to 5/21/DPNP on the Implementation of Risk Management for Commercial Banks, BI Regulation No. 13/1/PBI/2011 dated January 5, 2011, on the Assessment of Soundness Level of Commercial Banks, Bank Indonesia Circular Letter No. 13/24/DPNP dated October 25, 2011, on Assessment of Soundness Level of Commercial Banks, and other Bank Indonesia Regulations related to risk management. The Indonesia Financial Services Authority has issued POJK Number 18/POJK.03/2016 on the Implementation of Risk Management for Commercial Banks and SEOJK No. 34/POJK.03/2016 on the Implementation of Risk Management for Commercial Banks, which also serves as a reference for the Company’s risk management. [GRI 103-2]

STANDARD OF ETHICS AND CODE OF CONDUCT [GRI 102-16]

The disclosure of the Code of Conduct applies to all levels of the organization and is endorsed by the Board of Directors Regulation No. 30/PD/CSD/2010 dated 22 December 2010 on Guidelines for business ethics and conduct PT. Bank Tabungan Negara (Persero) Tbk and amended by the Board of Directors Regulation No. 16/PD/CMPD/2015 dated 31 December 2015 on the Code of Business Ethics and Conduct. The CoC contains the company’s commitment to various parties holding an interest, which is a realization of business ethics and work ethics for the Company’s personnel. Socialization of the Company’s CoC is conducted through the Company’s website and internet media called Access Internal Management Standard (AIMS) to all Company’s personnel and Stakeholders. Company’s CoC consists of four chapters, as follow: [GRI 103-2, GRI 103-3]

INTRODUCTION

The Code of Conduct is a codification or compilation of policies, employee regulations, and agreements that has been jointly developed by the Bank and its employees that will affect, form, and set standards of behavior for both the Board and employees in carrying out all business activities.

STANDARD BUSINESS ETHICS

Stipulates: Bank Ethics with Employees, Bank Ethics with Customers, Bank Ethics with Providers of Goods and Services, Bank Ethics with Competitors, Banking Ethics with Partners, Bank Ethics with Government, Bank Ethics with Community, Bank Ethics with Mass Media, and Banking Ethics with Professional Organizations

STANDARDS OF CONDUCT POLICY

• Conflict of Interest and Abuse of Position• Anti-Gratification and Anti-Corruption• Compliance with Law and Bank’s Regulation

IMPLEMENTATION AND ENFORCEMENT

The Board of Directors and the Board of Commissioners shall supervise the Code of Conduct within the Company and provide guidance, disciplinary sanctions and/or corrective and preventive actions related to violations of the Code of Conduct


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ANTI-CORRUPTION TRAINING AND COMMUNICATION

The Company is committed to implementing business activities in an honest, fair, and non-corrupt or bribery manner, and trustworthy. The Company recognizes that negative actions will have a profound effect on the Company’s name, brand, reputation, and business sustainability. Thus, any violation of anti-corruption and fraud policies is a serious matter and disciplinary action will be taken in accordance with prevailing regulations. The anti-fraud and anti-corruption implementation is regulated by the Board of Directors’ Circular Letter No. 22/DIR/IAD/2014 dated May 28, 2014, on Anti-Fraud Strategies

Standard Operating Procedure of PT Bank Tabungan Negara (Persero) Tbk. Anti-corruption and anti-fraud policy apply to all permanent or contract employees, the management of the Company, the Board of Commissioners, and the Board of Directors acting on behalf of the Company.

In addition, the Company has also engaged several employees to participate in training and seminars organized by private institutions and government agencies, such as Financial Services Authorities (OJK) and other parties related to Anti-Corruption and Anti-Fraud. The objective is that the anti-corruption prevention policies within the Company shall be implemented properly, in accordance with prevailing standards and regulations.

Education and Training 2017 related to Anti-Corruption [GRI 205-2]

Training Date Internal Audit Division (people)

Anti-Fraud Zero Tolerance & Zero Defect Wednesday, July 12, 2017 732

Fraud In Banking Industry March 22-23, 2017 2

Fraud Prevention & Detection Operational September 6-7, 2017 2

Fraud Prevention For Issuers & Acquirers March 21-23, 2017 3

Anti-Fraud & WBS Socialization Strategy Saturday, August 19, 2017 159

Workshop Fraud Prevention & Detection October 6-7, 2017 2

Workshop on "Fraud in Financial Transactions " October 11-12, 2017 4

WHISTLEBLOWINGREPORTINGMECHANISM

Whistleblowing System (WBS) is one of the facilities established by the Company to achieve a clean Company and with high integrity. The WBS is believed as one of the most effective ways to prevent and combat corruption, bribery, business ethics violations, or other fraudulent practices that are in conflict with good corporate governance principles. In implementing the WBS Policy, the Company refers to

Bank Indonesia Regulation (PBI) No. 5/8/PBI/2003 which was then amended by PBI No. 11/23/PBI/2009 and Bank Indonesia Circular Letter No. 13/28/DPNP on Anti-Fraud Policies. In addition, the Company has its own policies related to the violation reporting system, i.e. Directors’ Circular Letter No. 21/DIR/IAD/2014 dated May 28, 2014, on Standard Operating Procedure of Whistleblowing System of PT Bank Tabungan Negara (Negara), Tbk.



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Whistleblowing Reporting Mechanism [GRI 103-2, GRI 103-3]

The Company believes that the process of handling violation reporting function well if it is supported by qualified and reliable resources, in the form of people or other supporting facilities. The following parties manage the violation reporting system, hereinafter referred to as the WBS Team, consist of:1. Head of Internal Audit Division (Chairman and

concurrently Member)2. WBS Management Unit (Secretary)3. Head of Compliance Division (Member)

4. Head of Human Capital Division (Member)5. Head of Risk Management Division (Member)

In order to effectively implement the violation reporting system, the Company also periodically evaluates and conducts ongoing socialization to all employees and stakeholders.

The complaint report is submitted to the WBS Team through the following media:

The WBS Team receives reports/disclosures, records and presents it in a standard

reporting format

The WBS Team reports the results of the investigation to the Board of Commissioners/ Board

of Directors

The Reportee shall be sanctioned appropriately and the Whistleblower will be rewarded.

The WBS Team submits the results of the investigation to the Board of Commissioners/ Board

of Directors.

The WBS Team conducts initial review/clarification of the complaint, and makes a

resume, submitted to the Board of Commissioners/Board of

Directors

The Investigation Team conducts an investigation and reports the results to the Board of Commissioners/Board of

Directors

The initial evaluation/clarification and investigation

process is recorded in the Minutes of Meeting


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Whistleblowing Reporting Channel

To the well-meaning Whistleblower, the Company provides security and safeguards to encourage enforcement of discipline within the Company. The Company does not apply time limits for reporting violations, but the Company recommends that reporting is conducted immediately after the complainant believes the violation to be true, and submitted no later than three months after the violation occurred to facilitate further investigation.

COMPLAINT HANDLING RESULTSIn 2017, there were 99 complaints received by the WBS. 14 complaints are received via Mailbox/PO BOX, 44 complaints are received via SMS/Mobile/Direct Calls and 41 complaints are received via e-mail. Based on the reports received, 94 reports were settled without further audit (audit clarification and/or special audit) and 5 reports were passed for audit process (audit clarification and/or special audits). The 5 reports passed for audit are as follows:

Number of Reports and Follow Up

year

Media Channel Follow up

Letter/pO BOX SMS/ hp/ Direct visit E-Mail Closed reports

(not proven)

Ongoing reports (Audit process/

Reporting process/

Interdivision process)

Reports on sanctions imposed

(including administrative

sanctions)

Reports forwarded to Investigators

(related to public crimes or

Corruption)

2015 6 3 9 1 15 2 1

2016 5 2 1 0 8 0 0

2017 1 0 4 0 3 1 1

[email protected]

P0BoxWhistleBlowingSystem(WBS)BTNJakarta10000

MailBox

0811-92-45678Telephone

/SMS



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STAKEHOLDERS’ INVOLVEMENT

The Company has identified its key stakeholder groups using a stakeholder mapping method with the objective to enable the Company to know clearly who has the most interest to the Company on a reciprocal basis, what relationships are woven, what needs to be communicated, and how to maximize the characteristics of communication media. Thus, the Company can communicate with stakeholders

more effectively, and ultimately shall able to achieve the expected follow-up targets. Those who have direct potential to influence the sustainable operations and performance of the Company. There are 9 groups of stakeholders, i.e. Customers, Shareholders, Government and Financial Authorities, Employees, Trade Unions, Business Partners/Suppliers, Business Organizations, Social Organizations/Non-Governmental Organizations, and the Media. [GRI 102-40, GRI 102-42]

Fulfillment of Stakeholder Rights and Stakeholder Involvement in 2017

Stakeholder[GRI 102-40]

Involvement Method[GRI 102-43]

Frequency[GRI 102-43]

prioritized Topic [GRI 102-44]

Shareholders Annual GMS Once a Year Company’s target achievement

Extraordinary GMS Once a Year

Customer Customer Satisfaction Survey Twice a Year Service and quality of service to customers

Customers’ Communication Media Once a month

Customers’ Call Center Service Every time if necessary

BTN Website and Frontline Information

Direct visit

Employee Employee Engagement Survey Once a year Employee satisfaction rate

Internal Bulletin Once a month Employment-related policies and strategies

Smart Share Accessible at all time Discussion forums, job sharing, quizzes, information exchange

Innovation Award Once a year Accelerating business process

Partners/Suppliers

Employment contract When needed Procurement process

Investment Partners Business Cooperation

Seminar Workshop Development of Company’s merchat

Trade Union Collective Labor Agreement Discussion Once a Year Harmonious work relationshipRights and Duties of Employees


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Stakeholder[GRI 102-40]

Involvement Method[GRI 102-43]

Frequency[GRI 102-43]

prioritized Topic [GRI 102-44]

Government and Financial Authorities

Reporting on the GCG Implementation of Bank BTN Sharia Banking Unit

Once a Year Fulfillment of information and report related to the implementation of Company’s UUS GCG

GCG Self-Assessment Twice a Year Completion of GCG implementation delivery and evaluation in the Company

GCG Compliance Report Once a Year Completion of Company’s GCG implementation report

PKBL Activities reporting to the Ministry of SOEs

Four-time in a Year Facilities in Delivering report related to the implementation of PKBL activities in the Company

Reporting of SOEs Synergy PKBL Program Once a Year Fulfillment of information and report related to the implementation of PKBL Synergy Program within SOEs

Reporting on Supervision Result of Sharia Supervisory Board of Bank BTN’s Sharia Banking Unit

Twice a year Submission of information related to compliance with Sharia principles in the Bank operationsBTN Sharia

Business Organization

Meetings and activities, both on a national, regional and international scale

As needed Improvement of corporate governance, including capturing new policies related to governance

Community Organizations/Social/Non-Governmental Organizations

Strategic cooperation to carry out Corporate Responsibility programs, both in the social and environmental sectors

As needed Company’s CSR Program Optimization

Media Press ReleasePress Conference

As needed Providing information related to banking business that needs to be disclosed to the public



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07 PROVIDING ECONOMIC BENEFITS

Banking support holds a strategic role in national economic growth. Therefore, the Company as one of the State-Owned Banks constantly provides economic benefits to all Company’s stakeholders by continuing to create positive business growth.

Rp523,780 MillionDividend Payment to Shareholders41.49% Increase

Rp5,148 MillionExpenditure on Social Investment14.34% Increase

Rp2,467,501 MillionTax Payment to the Government26.64% Increase

Rp18,446,734 MillionInterest Revenue and Profit Sharing11,79 % Increase

Rp2,554,429 MillionEmployees’ Salary and Benefits20.40% Increase

666,806 unitMortgage Loan Disbursement100.12% of Target


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The Company commits to continuously improve its economic performance in a sustainable manner. In 2017, the Company succeeded in recording the current year earnings of Rp3,027,466 million, which experienced an increase of 15.60% from 2016, which was Rp2,618,905 million. The increase of net profit improves the distribution of economic value to the Company’s stakeholders. [GRI 103-2]

ECONOMIC VALUE DISTRIBUTION With the Company’s success in achieving positive economic performance growth, one of which is marked by the increase of direct economic value, by 2017 the Company also improved the distribution of economic value to the Company’s stakeholders. Direct economic value is the amount of revenue generated from each business activity conducted by the Company. Subsequently, the distributed economic value is the distribution of expenditures from the Company to the stakeholders.

The Company’s Economic Value (Rp Million) [GRI 201-1]

Economic value year

2015 2016 2017

Direct Economic value

• Interest Revenue and Interest Sharing 14,455,136 16,501,472 18,446,734

• Sharia Revenue Share 511,073 637,347 824,848

• Other Operational Revenue 1,106,526 1,282,822 1,605,931

• Non-Operational Revenue 8,281 (22,148) (30,348)

Total of Direct Economic value 16,081,016 18,399,493 20,847,165

Distributed Economic value• Interest Expenses and Bonuses 8,155,133 8,975,274 9,930,642

• Other Operational Expenses *) 2,560,841 3,264,951 3,616,138

• Salary and Employee Benefits 1,929,346 2,121,653 2,554,429

• Procurement of Goods and Services 386,791 415,797 556,768

• Dividends Payment to Shareholders 223,119 370,181 523,780

• Expenditures for the Government 1,502,406 1,948,503 2,467,501

• Expenditures on Social Investment **) 10,765 4,371 5,148

Total of Distributed Economic value 14,768,401 17,100,730 19,654,406

Retained Economic value

Total of Retained Economic value 1,312,615 1,298,763 1,192,759 *) Operating cost not including employees’ salary and benefits **) Realization of CSR Program Fund Distribution

Based on the table of Company’s economic value, throughout 2017 the Company reached Rp20,847,165 million of direct economic value, which was a 13.30% increase from 2016, i.e. Rp18,399,493 million. Furthermore, the distributed economic value of the Company reached Rp19,654,406 million, which was a 14.93% increase from 2016, i.e. Rp17,100,730 million. From both economic values, the Company’s retained economic value in 2017 amounted to Rp1,192,759 million. [GRI 201-1]

Throughout 2017, the Company did not receive any financial aids from the government regarding tax amnesty, subsidy, investment assistance, research and development aids, or other types of assistance that may support the Company’s operational performance. [GRI 201-4]



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The Company’s Tax Payment (Rp Million) [GRI 201-1]

Type of Tax 2015 2016 2017

Corporate Income Tax 541,740 743,020 1,090,161

Obligations 947,853 1,188,943 1,353,542

VAT 5,452 7,931 16,125

L&B Tax 7,361 8,609 7,673

Total 1,502,406 1,948,503 2,467,501

THE COMPANY’S CONTRIBUTION TO THE STATE

As a state-owned enterprise, the Government of the Republic of Indonesia owns the majority of the shares, i.e. 60.00%. Therefore, the Company always contributes to the national economic development, one of which is by dividend distribution. In 2017, the Company contributed dividends to the state in the amount of Rp523,780 million, which was a

41.49% increase from 2016, i.e. Rp370,181 million. This value is equivalent to 20% of Company’s income in the fiscal year 2016, i.e. Rp2,618,905 million.

In addition to the dividend sharing, the Company also contributes to the state in the form of tax payment. The Company paid Rp2,467,501 million of tax in 2017, which is an increase of 26.64% from 2016, i.e. Rp1,948,503 million.

MANAGEMENT OF INDIRECT ECONOMIC IMPACTS [GRI 103-2, GRI 103-3, GRI 203-1, GRI 203-2]

Infrastructure availability is one of the main aspects in accelerating the national development in various fields. The economic growth of a country is inseparable from the progress and availability of a comprehensive infrastructure. Therefore, the role of various economic sectors in supporting the economic development is necessary, including the banking sector as a strong financing channel for infrastructure credit. This is evidenced by the Company, which consistently supports Nawa Cita program that prioritizes the infrastructure development program to improve national economic competitiveness.

The Company, as one of the State-Owned Banks, is responsible for the national economic development, in particular, providing the services for Housing Loan

disbursement in the One Million Houses Program, widely spread from Aceh to Papua and targeting the middle to lower community. To date, the Company is the leading player in realizing government programs to build one million houses for the people. There are many benefits to the One Million Houses Program, among others, the habitable home for the community, in particular, the Low-Income Communities (MBR). The program also improves the public welfare and facilitates convenience in housing financing.

In 2017, the Company targets construction credit and Housing Loan (KPR) for 666 thousand housing units to support the One Million Houses Program, consisting of 504,122 units for Subsidized Housing Loan and 161,878 units for non-subsidized house construction and disbursement of non-subsidized Housing Loan. In 2017, the amount of this financing has exceeded the set target of 666,806 units of homes. The realization of Housing Loan reached 252,277 units, and construction credit reached 414,529 units with the financing value of Rp31.2 trillion.


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COMMUNITY ECONOMIC DEVELOPMENT THROUGH BALKONDES KARANGANYAR AS A TOURIST VILLAGE FOR POTTERY INDUSTRY CENTER [GRI 103-2, GRI 203-1, GRI 203-2]

In 2017, through ‘BUMN Hadir untuk Negeri (State-Owned Enterprises for the Nation)’, the Company established Village Economic Center (Balkondes), a tourism-based platform to improve the local economy and empower and develop the Human Resources through the activities development in the surrounding area. BTN Balkondes is located in Karanganyar Village, Borobudur District, Magelang Regency. The Balkkondes is one of the tourist villages in the Borobudur, which has the advantage as a pottery industrial center.

Balkondes is a platform to provide information on the pottery to the public, guests, tourists, visitors, and other parties. Pottery starts from the raw material, the production process (workshop), pottery burning, finishing, and then the finalization to be a ready-to-sell pottery (art shop and display). The production of pottery used to be limited to cooking utensils, but nowadays it comes in various forms, such as souvenirs. Clay as the main raw material is obtained from the surrounding area of the village. However, specifically for ceramic pottery, the raw material comes from other regions (in West Java).

There are 85 pottery artisans under the guidance of BTN Balkondes. By pursuing the mastery of pottery production, these artisans shall improve their economic revenue. Most pottery artisans used to produce from their own homes, with their own marketing strategies. Through BTN Balkondes, these artisans have the space, not only to show their expertise but also to attend training on how to develop during this digital economy era. The artisans received training to utilize the information technology to

support their product marketing throughout Indonesia, and even the whole world. The training covers how to open an e-commerce account, how to create added-value on their products, how to fill out an online store with product photos worth selling, attractive packaging, etc. on an online e-commerce site.

BTN Balkondes is expected to be a form of support for the preservation of traditional pottery making culture, making it a tourism icon, and is expected to provide economic impact for the village and its citizens.

In addition to that, the Company has launched housing finance for MBR in 2017, one of which is BTN Micro Housing Loan. Micro Housing Loan is a financing product with a credit limit of Rp75 million for home purchase, home renovation, and home construction for informal workers with non-fixed income. The Company has a strategic role as a form of

initiative to consistently provide economic benefits to the stakeholders. The Company also plays a role in supporting the realization of sustainable development goal through the creation of infrastructure to support economic development and public welfare, with focus on acceptable and even access to all.



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EMPOWERMENTOFLOCALSUPPLIERS

In supporting the business activities, the Company always cooperates with suppliers of goods and services both in the long term and short term, especially with companies engaged in construction as a support in the realization of One Million Houses Program. In the process of selecting suppliers, the Company refers to the effective efficient, open and competitive, transparent, fair and non-discriminatory, accountable, responsible, and independent principles. Furthermore, as a company that cares for the sustainability aspect, the Company also empowers local suppliers from

Indonesia. The policy is stipulated in the Directors Regulation No. 13/PD/PGSD/2015 on Procurement of Goods and/or Services. [GRI 103-2, GRI 103-3]

Throughout 2017, the Company’s total procurement value of goods and services reached Rp556,768 million, which is a 33.90% increase from 2016, i.e. Rp415,797 million. The total procurement value comes from 100% local suppliers. The objective is to reduce operating costs, while simultaneously support the economy of local companies. [GRI 204-1]

Value of Procurement of Goods and Services (Rp Million [GRI 204-1]

Type of Supplier 2015 2016 2017 Local Suppliers (%)

Local (National) 386,791 415,797 556,768

100%Non-local (International) - - -

Total 386,791 415,797 556,768


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08 COMPANY’S SUPPORT IN ENVIRONMENTAL CONSERVATION

Environment Risk Management Policy in Loan Disbursement

Participation in Earth Hour Campaign for Electricity Savings 61.9 kWh/hour

Paper Use Efficiency with iflow Application

The Environmental Management and Conservation CostRp157.20 Million

As a part of the global community that emphasizes the sustainability issues, the Company contributes to environmental conservation by applying environmental friendly credit distribution policy, environmental friendly banking operations, and conducting a series of go green program to preserve the environment for future generations.


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THE COMPANY’S COMMITMENT TO THE ENVIRONMENTAL CONSERVATION

Climate change and other environmental issues such as forest destruction, air pollution, water pollution, declining levels of biodiversity, and natural disasters continue to be the world’s environmental issues. Given these problems, the United Nations Assembly has announced the Sustainable Development Goals (SDGs) to be achieved by the world. In the 17 objectives of the SDGs, there are four objectives related to environmental conservation, i.e., they are Affordable and Clean Energy, Climate Action, Life Below Water, and Life on Land.

As a Company that engages in the banking sector, Bank BTN has no direct connection with environmental issues because its operational activities have no direct impact on the environment. However, the Company carries the responsibility to contribute to environmental conservation as a part of the global community. Throughout 2017, the Company is complying with Law No. 32 of 2009 on Environmental Protection and Management, sustainable financial roadmap, and Financial Services Authority Regulation No. 51/POJK.03/2017 on Sustainable Financial Implementation. This is demonstrated through the Company’s commitment to manage environmental risks through the implementation of environmentally friendly credit distribution, environmentally friendly banking operations. The Company also conducted a series of go green programs as a form of participation in promoting sustainable finance. [GRI 103-2]

DEVELOPMENT OF ENVIRONMENTAL FRIENDLY CREDIT DISBURSEMENT [FS2]

In line with the sustainable finance roadmap and Bank Indonesia Regulation (PBI) No. 7/2/2005 on Asset Quality Rating for Commercial Banks, which regulates that the assessment of business prospects as an element of credit

quality includes assessing the efforts made by the debtor in the context of environmental conservation, the Company constantly performs environmental risk management in funding or loan disbursement.

Commercial loans are one of the most important Company’s portfolios to be developed. In order to improve the competitiveness, service, and fulfill the customer’s wishes, it is necessary to stipulate the steps to support the commercial credit distribution by upholding the Bank’s prudential principles and Good Corporate Governance principles in providing credit facilities to optimize income and credit facilities, with regards to environmental aspects. In the Board of Directors’ Circular Letter of PT Bank Tabungan Negara (Persero) No. 17/DIR/CMLD/2016, the legality of the project has been set, which consists of:1. Land/land use permit2. Site plan authorized by the authorized party3. Building permit4. Proof of acquisition5. Copy of Notification of Tax Due (SPPT)6. Proof of entrance control7. Certificate of Peil Banjir8. PDAM Certificate9. Environmental feasibility certificate or Environmental

Monitoring Efforts and/or Environmental Impact Assessment (AMDAL)

AMDAL is a study on the major and significant impacts of a planned business and/or activity on the environment. AMDAL is required for the decision-making process of business operations and/or activities. AMDAL is compiled during the planning of a project, which is expected to have an impact on the environment (abiotic, biotic, and cultural aspects) in the vicinity. The legal basis for AMDAL in Indonesia is Government Regulation No. 27 of 2012 on “Environmental Permit”, which is a substitute of Government Regulation No. 27 of 1999 on AMDAL.

This credit risk assessment is implemented by taking into consideration the results of the Environmental Impact Assessment (AMDAL) before deciding to grant credit



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to a project. Furthermore, the Company also conducts monitoring or review through direct filed inspection to ensure that the prospective debtors meet all relevant environmental regulations. This is a form of prudential principles in the credit risk management. In addition, the Company also mandates that for every house built, there should be reforestation or replanting of tree. The slogan is ‘one house one tree’. The Company also mandates that there shall be fasum (general facilities) and fasos (social facilities). This is one of the Company’s initiatives in maintaining environmental sustainability. [FS3]

ENVIRONMENTAL FRIENDLY BANKING OPERATIONS (GREEN BANKING)

The Company’s commitment in managing environmental risks is also implemented through the management of environmentally friendly banking operations (green banking) that are conducted through energy usage management, water usage management, waste management, and paper usage management (paperless). This is one of the forms of Company’s awareness in minimizing the environmental impact caused by banking operations.

With this commitment, throughout 2017, the Company did not receive any complaint or grievance from stakeholders regarding environmental issues. Thus, the Company was not subjected to sanctions or penalties relating to non-compliance with laws and regulations in regards to the environment. [GRI 103-2, GRI 307-1]

ENERGY MANAGEMENTThe Company uses electricity to support its banking operations, which is provided by the Perusahaan Listrik Negara (PLN). Throughout 2017, the Company’s Head Office used 8,035,903 kWh or 28,929.25 GJ of electricity, which was a 24,643.30 GJ or 17.37% increase from 2016, i.e.

6,846,700 kWh or 24,648.12 GJ. This increase was due to the Company’s organizational development that resulted in relayout of the office space. [GRI 302-1]

Company’s Electricity Usage (gigajoule) [GRI 302-1]

unit 2015 2016 2017

kWh 8,207,160 6,846,700 8,035,903

gigajoule 29,545.78 24,648,12 28,929,25

The higher the electricity usage is, the higher the amount of greenhouse gas emission. This is the largest contributors to climate change. Thus, throughout 2017, the Company performed various efficiency initiatives for energy usage, as follows: [GRI 103-2, GRI 103-3]1. On March 25, 2017, the Company participated in Earth

Hour Campaign, i.e. turning off all lights on the last Saturday of the month for an hour.

2. Informing all employees on the importance of turning off the lights and other electronic after office hours.

3. Replacing the R-22 synthetic refrigerant freon of the air conditioner with environmentally friendly refrigerant, such as R-32, musicool 22, or R134a.

4. Replacing conventional light bulbs with Light Emitting Diode (LED) bulbs.

5. Reducing the intensity of face-to-face meeting and replacing it with meetings via teleconferences. This will reduce the use of oil fuel (BBM) for the for the transportation of meeting participants.

6. Rejuvenating vehicles into more environmentally friendly vehicles.

7. Suggesting the employee to use public transportation to commute.


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WATER MANAGEMENTUntil the end of 2017, the Company uses water from Perusahaan Daerah Air Minum (Local Water Utility/PDAM) and groundwater for sanitation of employees, parks, mosques, and pantry. The Company recognized that excessive use of groundwater may lead to a decrease in the soil surface, so the use of groundwater is reserved for water supply in the case of insufficient water distribution from PDAM. In 2017, the Bank BTN Head Office used 88,879 m3

water, which is a 30.25% increase from 2016, i.e. 68,200 m3. This increase occurred due to the addition of manpower and draining of water reservoirs. [GRI 303-1]

Company’s Water Usage Volume (m3) [GRI 303-1]

Water Source 2015 2016 2017

PDAM Water 65,276 68,200 88,724

Groundwater 1,779 36 155

Total 67,055 68,236 88,879

Despite the increase of water usage in 2017, the Company always encourages all employees to use water wisely. Further, the Company also managed to increase efficiency by reusing recycled water for various purposes, such as plant watering. [GRI 103-2, GRI 103-3]

WASTE MANAGEMENTThe Company practices waste management to support the efforts of environmental conservation. The Company’s operations produce solid waste in the form of paper, plastic, batteries, and lamps, as well as liquid waste in the form of wastewater. In accordance with the provisions of the Ministry of Environment (KLH), both types of waste are not included in the category of Hazardous and Toxic Wastes..

ThE COMpANy LOvES OuR EARTh By pARTICIpATING IN EARTh hOuR CAMpAIGN [GRI 103-2]

On March 25, 2017, the Company participated in the Earth Hour Campaign. The Campaign is a global movement to encourage individuals, communities, businesses, and governments all around the world to turn off all lights and electronic devices for an hour.

The theme for 2017 Earth Hour is “Shine a Light on Climate Action – from Moment to Movement”. Through this campaign, the Company has taken real action to change the lifestyle by reducing ecological footprints and greenhouse gas emission to preserve the Earth. This program saved the electricity of 61.9 kWh/hour. [GRI 302-4]



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Waste Management Volume and Method 2017 [GRI 306-2]

Type volume (m3) Management Method 2017

Wastewater 280 SewageTreatmentPlan(SWP)

88.724

The Company delegates the waste management task to a third-party, i.e. the building manager at the Head Office. Every three months, the Company routinely measures water quality from the wastewater management, thus the water discharged has met quality standards in accordance with Governor of Special Capital Territory of Jakarta Province Regulation No. 122 of 2005 on domestic wastewater management in the Special Capital Territory of Jakarta Province to avoid polluting the environment. On November 2, 2017, the Company did a measurement of wastewater at Bank’s Head Office, with the result as follows: [GRI 103-2, GRI 103-3]

The Company recognizes that higher paper usage means more trees being cut down, thus causing forest destruction. In fact, producing a ream of paper requires a five-year-old tree trunk. With those issues, the Company is committed to reduce paper usage, among others by: [GRI 103-2, GRI 103-3]1. Increasing effectiveness of billing method through calls

or directly using information technology application that supports mobile, paperless, historical record, and parameterized practices.

2. Using 2-sided printing method.3. Providing information to the customer for Electronic

Channel transaction.

The Company’s commitment to reduce paper usage is also implemented by encouraging the customers to use the Electronic Channel service as much as possible. This is evidenced by the increasing number of transactions using Electronic Channel service in 2017. Transactions

with ATM and Kiosk increased by 18.67%. Cash Deposit Machine (CDM) transactions increased by 5.26%. Internet Banking transactions increased significantly by 111.71%. Cash Management transactions increased by 31.83%. SMS Banking increased by 9.75%, and Mobile Banking transactions increased by 44.05%. [GRI 103-2]

Results of Wastewater Quality Measurement Bank BTN Head Office 2017

parameter unit Test Result Standards Method

pH - 7.0 6-9 SNI 06-6989.11-2004

Suspended Solids mg/L 21.0 30 Spectrophotometry

Ammoniac mg/L 2.54 10 No 41/IKM (Segmented Flow Analysis)

Oil and Grease mg/L - 5 Spectrophotometry

COD (Dichromate) mg/L 54.60 100 SNI 6989.73:2009 (Titrimetric)

BOD (20oC, 5 days) mg/L 10.81 30 SNI 6989.72:2009

Total Coliform Total/100 mL 900 3,000 No 40/IKM (Petrifilm)

PAPER MANAGEMENT (PAPERLESS)In the banking operations, paper is the main material for customer account creation, mailing activities, and other operational support activities. In 2017, the Company used 14,300 reams of paper, which is an increase of 11.72% compared to 2016, which was 12,800 reams. This increase was due to the Company’s organizational development that resulted in manpower addition. [GRI 301-1]


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Electronic Channel Transactions

ATM and KiosK Transactions

Cash Deposit Machine (CDM) Transactions

Internet Banking Transaction

SMS Banking Transaction

Mobile Banking Transaction

Cash Management Transaction

4,111,139

2015

72,191,957

2016

86,673,578

2017

4,942,511

2015

3,957,008

2016

4,342,884

2017

798,154

2015

763,641

2016

1,006,733

2017

124,631

2015

143,073

2016

150,602

2017

7,413,767

2015

15,828,032

2016

22,800,139

2017

251,757

2015

799,542

2016

1,692,732

2017



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GO GREEN pROGRAM

On November 11-12, 2017, the Company held the 17th annual event of BTN Tour de Borobudur. The event had 6,000 participants from within and outside the country, including the Central Java Governor Ganjar Pranowo. In this event, the Company participated to preserve the environment by planting 1,000 fruit tree seedlings in Jatibarang reservoir area, which is one of Semarang tourist attractions.

In welcoming the Company’s anniversary, the Company organized a planting movement of 67 manglid trees at the foot of Mount Ciremai in 2017. This is a form of awareness towards nature, as well as educating moment for children on the topic of environment.

pApER uSE EFFICIENCy WITh IFLOW AppLICATION [GRI 103-2]

iflow Application is a cross-division and/or cross-branch mail application with structured distribution. In addition to having advantages in the distribution of structured correspondence, this application also has other benefits such as the speed in the flow of mail distribution, the monitoring of documents or letters that have been delivered, and the reduction of paper usage (paperless) due to no printing required of the letters. This application has been used in the Company’s Head Office since 2011. [GRI 302-4]


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THE ENVIRONMENTAL MANAGEMENT AND CONSERVATION COST

Throughout 2017, the Company spent Rp157.20 million for the environmental management and conservation for the STP (Sewage Treatment Plan) and waste management. [GRI 103-2]

Environmental Management and Conservation Cost (Rp Million) [GRI 103-2]

Activity 2017

STP(SewageTreatmentPlan)Management 91.20

Waste Management 66.00

Total 157.20

ProjectofnewresidentialcomplexdevelopmentatSawanganarea,Depok,WestJava,Source:HENDRAASETyAWAN



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Salary Ratio of Entry Level Employees to Minimum Wage 1.45

4,563Total Female Employees(44.04%)5,797Total Male Employees(55.96%)

Employee Training Program1. School of Leadership2. School of Operational Banking3. School of Business BankingAverage Training Hours22.17 hours trained/participant

Employees’ promotion991 male employees700 female employees

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09 HUMAN RESOURCES MANAGEMENT

Human resources are the most important asset in supporting the banking business growth. Therefore, the Company strives to conduct innovative human resources management to create high quality, professional, and high integrity human resources, in accordance with the Company’s Mission.


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HUMAN RESOURCES ROADMAP

In line with the business transformation plan, the Company conducts the human resources (HR) strengthening by enhancing and improving HR capability as an agent of transformation. That is described as follows:

Building Block of Human Resources Development 2016-2020

Implementing the succession plan and clear career management to

identify risk of the availability of employees in key

positions

Maintaining the Management Trainee program/ODp consistently to provide the supply for the next generation leader continuously for the Company

Ensuring the success of the human Capital roadmap implementation

Facilitating and implementing BTN performance management to build the desired behavior and improve

employee engagement

Developing a Top Talent program for high-performing Employees to create a strong succession supply and

promoting internally

Adding Training and Development to the Company’s employees at the managerial level to build the best-in-class

and highly productive workforce

Compiling strategic manpower plan to determine the

long-term gap and preparing for the

future

Encouraging change through highest management

commitment and Management Office functions

Clarifying the strategic role of human Capital function and providing adequate Human

Capital

Implementing performance-based culture to maintain

sustainable success

Developing Employer value proposition and recruitment

campaign to attract the top talent to the

Company

Design and planning

Recruitment performance Management

human Capital Development

Engage and Retain



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EMPLOYEE’S DIVERSITY AND EQUAL OPPORTUNITIES

The Company applies the principle of diversity and equality to all employees in accordance with the basic principles of employment contained in Law No.13 of 2003 on Employment. This implementation starts from the existence of Company’s regulations or policies on human rights contained in the Directors’ Regulation, Directors’ Circular Letter, and Collective Work Agreement. In the regulation, the Company implements equality principles for employee recruitment, training programs, employee competence development, employee career development, remuneration, and employees welfare, regardless of gender, religion, ethnicity, race and other diversity. [GRI 103-2]

Through the implementation, as of the end of 2017, the Company has managed 10,360 employees from various backgrounds. In 2017, the Company employed one special need employee in the Head Office. The diversity composition of employees by gender shows 4,563 female employees (44.04%) and 5,797 male employees (55.96%).


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Employee Composition by Gender [GRI 102-8]

Description2015 2016 2017

Male Female Total Male Female Total Male Female Total

Employment Status

Permanent Employee

4,452 3,728 8,180 4,748 3,813 8,561 4,921 3,859 8,780

Contract Employees

519 343 862 432 251 683 876 704 1,580

Total 4,971 4,071 9,042 5,180 4,064 9,244 5,797 4,563 10,360

Working Area

Head Office 1,133 306 1,439 1,182 335 1,517 1,335 403 1,738

Branch Office 3,838 3,765 7,603 3,998 3,729 7,727 4,462 4,160 8,622

Total 4,971 4,071 9,042 5,180 4,064 9,244 5,797 4,563 10,360

Education

High School 258 401 659 275 418 693 275 418 693

3-yr-Bachelor 742 962 1,704 789 897 1,686 886 985 1871

4-yr-Bachelor 3,717 2,641 6,358 3,856 2,677 6,533 4,366 3,072 7438

Master 254 67 321 260 72 332 270 88 358

Total 4,971 4,071 9,042 5,180 4,064 9,244 5,797 4,563 10,360

Age

≤30 years 2,823 2,943 5,766 2,945 2,816 5,761 3,433 3,120 6,553

31-50 years 1,678 954 2,632 1,751 1,043 2,794 1,899 1,223 3,122

≥51 years 470 174 644 484 205 689 465 220 685

Total 4,971 4,071 9,042 5,180 4,064 9,244 5,797 4,563 10,360

Employee Composition by Employment Status and Working Area [GRI 102-8]

Description

2015 2016 2017

permanent Employee

Contract Employees

Totalpermanent Employee

Contract Employees

Totalpermanent Employee

Contract Employees

Total

Working Area

Head Office 1,367 72 1,439 1,438 79 1,517 1,568 170 1,738

Branch Office 6,813 790 7,603 7,123 604 7,727 7,212 1,410 8,622

Total 8,180 862 9,042 8,561 683 9,244 8,780 1,580 10,360



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Employee Composition by Position [GRI 405-1]

Description

2015 2016 2017

Grade 22 Grade 19-21

Grade 15-18

Grade 13-14

Grade 11-12

Grade 8-10 Total Grade 22 Grade

19-21Grade 15-18

Grade 13-14

Grade 11-12


19-21Grade 15-18

Grade 13-14

Grade 11-12

Grade 8-10 Total

Gender

laki-laki 1 64 677 1,251 2,419 559 4,971 1 75 705 1,274 2,520 605 5,180 1 82 755 1,613 2,697 649 5,797

Perempuan 1 15 198 555 2,023 1,279 4,071 2 15 221 586 2,047 1,193 4,064 3 17 238 751 2,442 1,112 4,563

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

Employment Status

Permanent Employee

2 77 865 1,663 4,016 1,557 8,180 2 87 911 1,695 4,167 1,699 8,561 3 91 980 2,088 3,968 1,650 8,780

contract Employees - 2 10 143 426 281 862 1 3 15 165 400 99 683 1 8 13 276 1,171 111 1,580

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

working area

Head Office 2 53 360 393 622 9 1,439 3 61 386 458 598 11 1,517 4 73 436 658 554 13 1,738

Kantor cabang - 26 515 1,413 3,820 1,829 7,603 - 29 540 1,402 3,969 1,787 7,727 - 26 557 1,706 4,585 1,748 8,622

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

Education

High School - - 17 190 143 309 659 - - 28 179 145 341 693 - - 30 175 147 341 693

3-yr-Bachelor - - 41 244 711 708 1,704 - - 48 239 759 640 1,686 - - 66 222 987 596 1,871

4-yr-Bachelor 2 50 646 1,304 3,539 817 6,358 1 59 672 1,370 3,618 813 6,533 2 59 712 1,883 3,961 821 7,438

Master - 29 171 68 49 4 321 2 31 178 72 45 4 332 2 40 185 84 44 3 358

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

age

≤30 Year - - 14 342 3,781 1,629 5,766 - - 13 419 3,749 1,580 5,761 - - 7 907 4,120 1,519 6,553

31-50 Year - 45 663 1,193 522 209 2,632 - 52 696 1,150 678 218 2,794 - 63 773 1,163 881 242 3,122

≥51 Year 2 34 198 271 139 - 644 3 38 217 291 140 - 689 4 36 213 294 138 - 685

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360


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Employee Composition by Position [GRI 405-1]

Description

2015 2016 2017

Grade 22 Grade 19-21

Grade 15-18

Grade 13-14

Grade 11-12


19-21Grade 15-18

Grade 13-14

Grade 11-12


19-21Grade 15-18

Grade 13-14

Grade 11-12

Grade 8-10 Total

Gender

laki-laki 1 64 677 1,251 2,419 559 4,971 1 75 705 1,274 2,520 605 5,180 1 82 755 1,613 2,697 649 5,797

Perempuan 1 15 198 555 2,023 1,279 4,071 2 15 221 586 2,047 1,193 4,064 3 17 238 751 2,442 1,112 4,563

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

Employment Status

Permanent Employee

2 77 865 1,663 4,016 1,557 8,180 2 87 911 1,695 4,167 1,699 8,561 3 91 980 2,088 3,968 1,650 8,780

contract Employees - 2 10 143 426 281 862 1 3 15 165 400 99 683 1 8 13 276 1,171 111 1,580

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

working area

Head Office 2 53 360 393 622 9 1,439 3 61 386 458 598 11 1,517 4 73 436 658 554 13 1,738

Kantor cabang - 26 515 1,413 3,820 1,829 7,603 - 29 540 1,402 3,969 1,787 7,727 - 26 557 1,706 4,585 1,748 8,622

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

Education

High School - - 17 190 143 309 659 - - 28 179 145 341 693 - - 30 175 147 341 693

3-yr-Bachelor - - 41 244 711 708 1,704 - - 48 239 759 640 1,686 - - 66 222 987 596 1,871

4-yr-Bachelor 2 50 646 1,304 3,539 817 6,358 1 59 672 1,370 3,618 813 6,533 2 59 712 1,883 3,961 821 7,438

Master - 29 171 68 49 4 321 2 31 178 72 45 4 332 2 40 185 84 44 3 358

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360

age

≤30 Year - - 14 342 3,781 1,629 5,766 - - 13 419 3,749 1,580 5,761 - - 7 907 4,120 1,519 6,553

31-50 Year - 45 663 1,193 522 209 2,632 - 52 696 1,150 678 218 2,794 - 63 773 1,163 881 242 3,122

≥51 Year 2 34 198 271 139 - 644 3 38 217 291 140 - 689 4 36 213 294 138 - 685

Total 2 79 875 1,806 4,442 1,838 9,042 3 90 926 1,860 4,567 1,798 9,244 4 99 993 2,364 5,139 1,761 10,360



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In 2017, the Company has also applied the principle of gender equality in the Company’s internal management. The Company provides equal opportunity for both men and women to take the highest position in the Company. This is reflected in one female member of Board of Commissioners and two female members of the Company’s Committee.

RECRUITING THE BEST PERSONNEL

In order to ensure the availability of the best-talented employees to support the Company’s performance improvement, the Company conducts recruitment process annually. This is the form of Bank BTN support in order to achieve the sustainable development goal with the creation

of decent work field. Recruitment related to policy stipulated in the Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Acquisition. There are two recruitment process in the Company, i.e.: [GRI 103-2]1. Internal Recruitment is employee recruitment by utilizing

existing staff to fill a vacancy in a particular unit, based on organizational needs and on the basis of calculation of workload analysis.

2. External recruitment is recruitment of employees who are obtained from the outside of the bank to fill certain vacancies in a particular unit.

Company’s Governance Composition [GRI 405-1]

Description

2015 2016 2017

Board of Commissioners

Board of Directors

Committees TotalBoard of

CommissionersBoard of Directors

Committees TotalBoard of

CommissionersBoard of Directors

Committees Total

Gender

Male 5 8 4 17 6 7 4 17 7 8 3 18

Female 3 - 2 5 2 1 2 5 1 - 2 3

Total 8 8 6 22 8 8 6 22 8 8 5 21

Age

≤ 30 Year - - - - - - - - - - - -

31-50 Year 4 1 1 6 2 1 - 3 1 3 - 4

≥ 51 Year 4 7 5 16 6 7 6 19 7 5 5 17

Total 8 8 6 22 8 8 6 22 8 8 5 21

The Company’s diversity and equity principles aim to uphold the dignity of the Company’s employees in realizing social and economic justice and preventing discrimination incidents. This is the form of Bank BTN support and initiative in order to achieve the sustainable development goal, i.e. By reducing the gap and promoting gender equality. Therefore, throughout the diversity and equality principle implementation, in 2017, there are no complaints related to incident of human rights violations, including discrimination incident that involved internal and external stakeholders in all area of the Company’s operations. [GRI 103-2, GRI 406-1]


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The requirement mandated that the Company set a minimum age of 18 years for prospective employees. This commitment is also a prerequisite determined by the Company in establishing cooperation with suppliers. This is a form of Company’s compliance with Law No. 13 of 2003 on Employment Article 68. Therefore, in 2017, there is no incidents of underage employees employed by the Company or its suppliers. [GRI 103-2, GRI 408-1]

In 2017, the Company has recruited 1,837 new employees with a recruitment rate of 17.73% of the total number of permanent employees in the Company. This amount has increased by 34,88% compared with 2015, which amounted to 1,362 people. By gender, the Company recruited 870 (47.36%) female employees and 967 (52.64%) male employees. This shows the Company’s commitment to implementing the gender equality principle in the Company’s recruitment process. [GRI 401-1]

Composition of Company’s New Employees [GRI 401-1]


Gender

Male 593 764 967

Female 467 598 870

Total 1,060 1,362 1,837

Working Area

Head Office 854 1,005 1,666

Branch Office 206 357 171

Total 1,060 1,362 1,837

Age

< 30 Years 948 1,215 1,801

30-50 Years 108 144 36

> 51 Years 4 3 0

Total 1,060 1,362 1,837

EMPLOYEE TURNOVER

Every work relationship between the Company with the employee will be terminated due to specific matters. In order to end the work relationship in a good manner, the Company has a policy stated in the Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Engagement. In 2017, there were 499 employees who left the Company, and the turnover rate is 4.82%. [GRI 103-2, GRI 401-1]

Employee Turnover [GRI 401-1]


Gender

Male 300 213 256

Female 265 252 243

Total 565 465 499

Working Area

Head Office 95 56 67

Branch Office 470 409 432

Total 565 465 499

Age

< 30 Years 357 265 255

30-50 Years 88 95 120

> 51 Years 120 105 124

Total 565 465 499

EMPLOYEES’ TRAINING AND COMPETENCE DEVELOPMENT PROGRAM

In order to improve the competence to suit the needs and developments of the banking world, the Company always provides training, both internal and external to employees. This policy has been stated in the Board of Directors’ Decree No.04/KD/SIPD/2017 dated May 29, 2017, on the amendment to the Board of Directors’ Decree No.3/KD/DIR/SIPD/2017 on the Head Office Organizational Structure in Article 8 point 5h on the Organizational Structure of Learning



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Center Division. The Company divides training programs into three schools, i.e.: [GRI 103-2]1. School of Leadership. This training aims to form a

leadership attitude at the Company’s Leader level. The program consists of ODP (Officer Development Program), MDP (Management Development Program), SDP (Supervisor Development Program), overseas and domestic Master Program Scholarship, SESPIBANK (Bank Staff and Management School) for Board of Commissioners and Directors, EDP (Executive Development Program) overseas for Division Heads, and other leadership programs.

2. School of Operation Banking. This training aims to provide the expertise or competence of the Company’s supporting parts as the Company’s business enabler. The program consists of Faculty of Audit, Faculty of Compliance, Faculty of Corporate Affairs, Faculty of Human Capital, Faculty of Information Technology, Faculty of Legal, Faculty of Management System,

Faculty of Risk, Finance, and Accounting, Operational Banking, and Others

3. School of Business Banking. This training aims to provide skills or competencies that focus on business development and management consisting of Collection & Asset Management, Commercial Funding, Retail Funding & Service, Commercial Lending, Consumer Lending, Digital Banking, Sharia Financing, Service Quality, Sharia Funding, Sharia Others, Treasury, Wealth Management, and Others.

In 2017, the Company invested Rp164,686 million for these training, which consists of Rp76,198 million for School of Leadership, Rp52,673 million for School of Operation, and Rp35,815 million for School of Business. Hence, the average training reached 22.17 hours of training per attendee.

Average of Training Hours by Gender in 2017 [GRI 404-1]

DescriptionDuration (hour) Number of participants (person) Average Training hours

Male Female Total Male Female Total Male Female Total

School of Leadership 205,584 94,968 300,552 2,686 1,935 4,621 76.54 49.08 65.04

School of Operation Banking 69,752 48,192 117,944 5,302 4,540 9,842 13.16 10.61 11.98

School of Business Banking 119,768 103,488 223,256 6,845 7,634 14,479 17.50 13.56 15.42

Total 395,104 246,648 641,752 14,833 14,109 28,942 26.64 17.48 22.17

Average of Training Hours by Employees’ Category in 2017 [GRI 404-1]

DescriptionDuration (hour) Number of participants (person) Average Training hours

Management Staff Total Management Staff Total Management Staff Total

School of Leadership 43,696 256,856 300,552 1,557 3,064 4,621 28.06 83.83 65.04

School of Operation Banking 48,968 68,976 117,944 3,357 6,485 9,842 14.59 10.64 11.98

School of Business Banking 78,040 145,216 223,256 4,585 9,894 14,479 17.02 14.68 15.42

Total 170,704 471,048 641,752 9,499 19,443 28,942 17.97 24.23 22.17


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In addition to providing training to employees, the Company also provides opportunities for permanent employees to continue their education to a higher level. It aims to meet and improve the employees’ competence to create potentially skilled, resilient, and responsive workforces in accordance with the needs and development of the bank. This is stipulated in Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Development. During 2017, the Company has provided Scholarship Program to 25 employees to continue their Master degree in the country and 11 staff to continue the Master degree abroad. [GRI 103-2]

Training in the field of digital banking transformation is very important to face ASEAN free market competition. With the digital banking implementation, it is very possible to increase market share. Thus, the Company shall compete with foreign banks that will enter Indonesia by 2020. Technology mastery is needed to support the Company’s operations to be more effective and efficient. The technology can simplify, facilitate, and control the performance process, improve the quality of services provided to customers, lower operating costs, simplify the storage or record, and analyze customer data. These matters shall help the bank in maintaining customer relationships, overcoming customer complaints to be better, and developing better products that suit the needs of customers. Therefore, in 2017, the Company held digital banking training in the School of Business Banking program.[GRI 103-3]

HARMONIOUS INDUSTRIAL RELATIONS AND FREEDOM OF ASSOCIATION

As a Company’s compliance with Article 28E paragraph (3) of the 1945 Constitution of the Republic of Indonesia, which stipulates that “Every person shall have the right to the freedom to associate, to assemble and to express opinions”, Law No. 21 of 2000 on Trade Unions, and International Labour Organization Convention No. 87 of 1948 on Freedom of Association and Protection of the Right to Organize, the Company, on June 24, 1999 established a union called SP-BTN and obtained a record number at the Department of Manpower of DKI Jakarta No. Kep-2241/W.26/K.2/1000. The establishment of SP-BTN is an effective means of communication between the Company’s management and all employees. [GRI 103-2]

The Company provides freedom of association to all Company’s employees, which includes: [GRI 103-2]1. To become a member of SP-BTN2. Delivering aspirations through SP-BTN3. To gather in SP-BTN activities

As a result of the Company’s commitment to providing the freedom to associate for employees, there were no violations or complaints related to the freedom to associate in the Company in 2017. [GRI 407-1]



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Further, as one of the main means to achieve harmonious, safe, and dynamic industrial relations to ensure the certainty of the rights and obligations of the employees and the Company, to provide peace of mind in working, improve the welfare of employees, and ensure the continuity of the Company’s business, since October 2 2012, the Company established and registered a Collective Labor Agreement (CLA) to the Ministry of Manpower and Transmigration of the Republic of Indonesia No. Kep.157/PHIJSK-PKKAD/PKB/X/2012. In 2017, the rights of all of Company’s employees (10,360 employees or 100%) are covered by CLA. [GRI 102-41, GRI 103-2] The Company constantly notifies the contents of the CLA to all Company’s employees. The Company will also provide information related to important changes of the Company, such as changes to the organizational structure and the addition of business units to the Company’s employees. Notification of changes shall be informed by memos to all task forces and shall be accessible via AIMS (internal application related to Company’s provisions). This is a form of effective two-way communication practice to minimize the impact of changes made.

As a compliance with human rights, in addition to granting freedom of association in SP-BTN forum, the Company is also committed to preventing incidents of forced labor by the time-related regulations of employees as stipulated in the Board of Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Development. The regulation stipulates the bank’s day and working hours so the employees can attend, work, and rest in accordance with the time specified. However, if in certain circumstances there is work to be completed beyond the working hours, the Company provides compensation in the form of overtime pay to employees who work beyond the working hours. This is stipulated in Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Development. [GRI 103-2, GRI 409-1]

PERFORMANCE ASSESSMENT SYSTEM AND EMPLOYEE’S CAREER DEVELOPMENT

In accordance with the Board of Directors’ Circular Letter No. 28/DIR/HCD/2016, the Company conducts performance reviews, performance evaluations, and employee assessment using the Human Capital Information System (HCIS) annually. The Company’s targets are distributed to all Work Unit and then delegated to every employee based on the potential and capability in the Key Performance Indicator (KPI). In 2017, all Company’s employees (100%), both men and women at all levels of the organization obtain the performance assessment. [GRI 103-2, GRI 404-3]

The Company puts the performance assessment as one of the indicators to make decisions in the career development of employees. In the career development of employees, the Company does not discriminate by gender, but the employee will be assessed based on competence and potential. In particular, the Company has a policy related to employee career planning and development as stipulated in Directors’ Circular Letter No. 26/DIR/HCD/2014 on PT Bank Tabungan Negara (Persero) Tbk Employee Career Planning. In 2017, the Company promoted 991 male employees and 700 female employees. [GRI 103-2, GRI 404-3]


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87


Employee’s Career Development Percentage by Gender and Position [GRI 404-3]

GradeTotal Employee promotion Rotasi promotion and Turnover*

Female Male Total Female % Male % Total % Female % Male % Total % Female % Male % Total %

22 2 1 3 1 50.00% - - 1 33.33% - - - - - - 1 50.00% - - 1 33.33%

21 2 5 7 - - 2 40.00% 2 28.57% 7 350.00% 6 120.00% 13 185.71% 7 350.00% 8 160.00% 15 214.29%

20 5 29 34 - - 12 41.38% 12 35.29% 6 120.00% 49 168.97% 55 161.76% 6 120.00% 61 210.34% 67 197.06%

19 8 38 46 4 50.00% 13 34.21% 17 36.96% 4 50.00% 29 76.32% 33 71.74% 8 100.00% 42 110.53% 50 108.70%

18 21 110 131 8 38.10% 40 36.36% 48 36.64% 12 57.14% 77 70.00% 89 67.94% 20 95.24% 117 106.36% 137 104.58%

17 33 165 198 6 18.18% 36 21.82% 42 21.21% 13 39.39% 86 52.12% 99 50.00% 19 57.58% 122 73.94% 141 71.21%

16 72 148 220 6 8.33% 29 19.59% 35 15.91% 43 59.72% 109 73.65% 152 69.09% 49 68.06% 138 93.24% 187 85.00%

15 101 298 399 32 31.68% 95 31.88% 127 31.83% 50 49.50% 171 57.38% 221 55.39% 82 81.19% 266 89.26% 348 87.22%

14 294 648 942 74 25.17% 110 16.98% 184 19.53% 231 78.57% 475 73.30% 706 74.95% 305 103.74% 585 90.28% 890 94.48%

13 335 762 1.097 123 36.72% 344 45.14% 467 42.57% 229 68.36% 486 63.78% 715 65.18% 352 105.07% 830 108.92% 1.182 107.75%

12 680 867 1.547 187 27.50% 240 27.68% 427 27.60% 570 83.82% 982 113.26% 1.552 100.32% 757 111.32% 1.222 140.95% 1.979 127.93%

11 1.192 1.199 2.391 38 3.19% 6 0.50% 44 1.84% 905 75.92% 1.134 94.58% 2.039 85.28% 943 79.11% 1.140 95.08% 2.083 87.12%

10 368 115 483 221 60.05% 49 42.61% 270 55.90% 235 63.86% 64 55.65% 299 61.90% 456 123.91% 113 98.26% 569 117.81%

09 705 446 1.151 - - 15 3.36% 15 1.30% 717 101.70% 409 91.70% 1.126 97.83% 717 101.70% 424 95.07% 1.141 99.13%

08 3 13 16 - - - - - - 1 33.33% 11 84.62% 12 75.00% 1 33.33% 11 84.62% 12 75.00%

Total 3,821 4,844 8,665 700 18.32% 991 20.46% 1.691 19.52% 3,023 79.12% 4.088 84.39% 7,111 82.07% 3,723 97.44% 5,079 104.85% 8,802 101.58%

*) The number of rotational promotions is the number of employees who have mutated for promotional reasons

REMUNERATION SYSTEM AND EMPLOyEE’SWELFAREPEGAWAI

One of the Company’s social responsibility is to provide continuous welfare and benefits for all stakeholders of the Company, one of whom is the employees. Remuneration System and Employee’s Welfare is stipulated in the Directors’ Circular Letter No. 36/DIR/HCD/2017 on Human Capital Reward. In providing remuneration, the Company applies fair rewards and equal treatment without discrimination to all employees, regardless of gender, ethnicity, race, religion, skin color, and other diversity. The remuneration shall be based on the performance’s achievement and responsibilities of the positions held. [GRI 103-2, GRI 405-2]

Based on the employment status, the Company provides leading remuneration component and facilities to permanent employees compared to the contract employees. However, the Company ensures that the rights

of the Company’s contract employees have been in line with the standards prevailing rules. The permanent employees have the remuneration component and facilities, i.e. basic salary, Holiday Allowances, leave allowance, clothing allowance, facilities (position, housing, vehicle, expertise, oil fuel, location, tax), performance bonus, housing loan, pension, Jamsostek (health insurance for formal workers), medical checkup, medical aid, and relief money. The contract employees have all remuneration and facilities except for leave money, allowances (housing, vehicles, skills, fuel), housing loans, and pensions. [GRI 401-2]

The Company also makes salary adjustments due to rising inflation and complies with the minimum wage provisions, based on the Regulation of the Minister of Manpower and Transmigration of the Republic of Indonesia No. 7 of 2013 on Minimum Wage. The Company is committed to always provide salaries of entry-level employees above the Minimum Wage standard applicable in the Company’s operational areas. [GRI 103-2]



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8988

Comparison of Salary of Entry-Level Employees with Minimum Wage [GRI 202-1]

Operational Area* Entry Level Employee Wage (Rp) Minimum Wage (Rp)

Ratio of Entry Level Employee Wage to

Minimum Wage

Cluster 1 3,650,000 3,355,750 1.09

Cluster 2 2,900,000 1,420,624 2.04

Cluster 3 2,300,000 1,367,000 1.68

Cluster 4 3,300,000 1,388,000 2.38

Cluster 5 2,500,000 1,388,000 1.80

Cluster 6 2,500,000 1,956,727 1.28

Cluster 7 2,600,000 1,949,285 1.33

Cluster 8 3,100,000 2,534,674 1.22

Cluster 9 2,600,000 2,500,000 1.04

Cluser 10 2,300,000 1,882,900 1.22

Cluster 11 3,100,000 2,258,000 1.37

Cluster 12 3,100,000 2,339,556 1.33

Cluser 13 2,800,000 2,663,647 1.05

Average 1.45

Cluster 1 : Jakarta, Bekasi, Bogor, Tangerang, Cilegon, Depok, Karawang, Purwakarta, CilegonCluster 2 : Bandung, Cimahi, Cirebon, TasikmalayaCluster 3 : Madiun, Pekalongan, Purwokerto, Semarang, Solo, Yogyakarta, TegalCluster 4 : Gresik, Sidoarjo, SurabayaCluster 5 : Jember, Kediri, MalangCluster 6 : Bali, NTT, NTBCluster 7 : Lampung, Bengkulu, Jambi, Sumatera Barat, Sumatera Selatan, RiauCluster 8 : Bangka Belitung, Kep.RiauCluster 9 : Nanggroe Aceh Darussalam, Sumatera UtaraCluster 10 : Kalimantan BaratCluster 11 : Kalimantan Selatan, Kalimantan TengahCluster 12 : Kalimantan TimurCluster 13 : Maluku, Maluku Utara, Gorontalo, Papua, Sulawesi


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The Company also provides maternity leave and miscarriage leave for female permanent employees for 1.5 (one half) months before and 1.5 (one and a half) months after delivery, or 3 (three) months of delivery. Miscarriage leave is provided for 45 days since the day of miscarriage. In addition, the Company also gives five-day permission to leave work for male employees when their wife gives birth (paternity leave). This facility is stipulated in the Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Administration. [GRI 103-2]

Throughout 2017, there were 279 female employees who exercised their rights to maternity leave, and the retention of the employee returning to work of 100%. This indicates the availability of insurance for employees to return to work after using the right to maternity leave. [GRI 401-3]

In accordance with the Board of Directors’ Circular Letter No. 43/DIR/CMO/2011 on Human Capital Engagement, the Company provides several pension benefits to employees to finance their lives after the Company’s employment relationship ends. Employee who is entitled to a pension benefit is a permanent employee who has reached the normal retirement age of 56 years. Pension Benefits consist of: [GRI 103-2, GRI 201-3]1. Definite Benefit program, permanent employees receive

benefits according to the formula set by the Pension Fund.

2. The Defined Contribution Program, permanent employees receive pension from accumulated contributions i.e. 2.5% deducted from the employee’s salary, 7.5% from the Company, and the investment result.

Referring to the Board of Directors’ Decree that stipulates the PT Bank Tabungan Negara (Persero) Tbk Pension Fund Regulation (Dapen BTN), the amount of Pension Benefit is at most 80% of the Basic Pension Income. In 2017, the subsidy for pension fund contribution paid by the Company amounts to Rp35,623 million.

EMPLOYEE ENGAGEMENT SURVEY [GRI 103-3]

On 31 October to 10 November 2017, the Company conducted an Employee Engagement Survey with the objective to:1. Provide an opportunity for employees to express their

personal opinions honestly through online surveys related to matters that have been going well and matters that can be improved in the Company.

2. Analyze gap between the employees’ experience and Company’s objectives, and improve insight to enhance performance and productivity.

3. Encourage improvement of the employees’ engagement level to the Company.

The survey method is the distribution of questionnaires for all the Company’s permanent employees. The questionnaire contains 60 questions with a scaled assessment and seven open questions. In general, the employee engagement formulation method is.



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Based on the results, the study showed that companies with employee engagement scores above 73% indicate better delivery of business results. The employees engagement survey in 2017 resulted in a 78% score, which increased from 2016, i.e. 77%. The number is above the moderate zone and

Employee Engagement Survey Result 2017

Leadership

The Work Experience

Brandperformance

The Work

The Basic

Company practice

SAy

STAy

STRIvE

Talent Retention Absenteeism wiriness

Operational Productivity Safety

CustomerSatisfactionRetention

FinancialRevenue/Sales Growth DP. Income/ Margin Total Shareholder return

Brand Practices• Customer Focus • Diversity & Inclusion • Enabling infrastructure • Survey Follow Up• Talent & Staffing

Leadership• Senior Leadership

Supervision

Brand• Brand

Foundation

Best Employer Differentiator

ENGAGEMENT DRIVERS ENGAGEMENT OUTCOMES BUSINESS CUSTOMER

Performance• Career Opportunities

Learning & Development • Performance

Management• Rewards & Recognition

The Work• Collaboration• Empowerment/

Autonomy• WorkTask

The Basic• Work/Life

Balance

above the 65% average of engagement survey in Indonesia. In fact, the Company’s employees engagement is at the Top Quartile level, which indicates that the employee’s level of engagement with the Company is quite high.

10

0

50

30 70

90

20

6040

80

100

Bank BTN2017 78%

Bank BTN2016 77%

Indonesia66%

Financial InstitutionAPAC 67%

Financial InstitutionIndonesia 72%

BE Indonesia Benchmark 86%

Botto

mQu

artil

e

Moderate

zone

TopQuarantine


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OCCUPATIONAL HEALTH AND SAFETY MANAGEMENTReferring to Law No. 13 of 2003, Article 86 paragraph 2, which stipulates that “In order to protect the safety of workers/labor for realizing optimal productivity, occupational safety and health efforts shall be done”, the Company has a policy related to Occupational Safety and Health Management System (SMK3), which is stated in: [GRI 103-2]

1. Directors’ Regulation No. 5/PD/PGSD/2017 dated October 31, 2017, on the Occupational Health and Safety Management System Policy.

2. Directors’ Circular Letter No. 60/DIR/PGSD/2017 dated October 31, 2017, on the Standard Operating Procedure of Occupational Health and Safety Management System

The policy stipulates:

Standard Operational procedure (SOp) of Safety and health Management System (SMK3)

a. Establishment of Occupational Health and Safety Committee (P2K3)b. Risk Control, Assessment, and Hazard Identificationc. Identification of Legislation and other OHS requirements and Compliance Evaluationd. Formulation and Establishment of OHS Management Goals, Targets, and Programse. Improvement and Development of Competence, Training, and Awarenessf. Communication Optimization, Participation, and Consultationg. Documents Controlh. Records Controli. Establishment of Emergency Relief Team (TKPD)j. Personal Protective Equipment Managementk. Management of OHS Infrastructure and Emergency Relief Accessl. Monitoring and Assessment of OHS Performancem. Incident Reporting and Investigationsn. Identification of Non-Conformity, Corrective Action, and Precautionso. SMK3 Internal Audit Implementationp. Management Reviewq. Change Management

The Company’s Occupational Safety and health Management System (OhS) Special policy

a. Prohibition of Narcotics Abuse, Psychotropic and Addictive Substance (NAPZA)b. Prevention of Infectious Diseases Spreading c. Management of Partner/Third Party Related to OHS



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• All operational offices are equipped with safety equipment such as PPE (Personal Protective Equipment), Smoke Detector, Diesel Pump, and Emergency Ladder, which is in accordance with the standard of fire safety equipment under the Minister of Public Works Regulation on Technical Requirements of Fire Protection System in Building and Environment.

• Regular safety work checks to determine the feasibility level.

• Has a certificate issued by the Office of Manpower and Transmigration of DKI Jakarta Province for operators of safety equipment, such as lifting and hauling aircraft.

• Has fire evacuation/situation plan, fire safety operational procedures are placed in every employee’s room and every floor in the building, thus all employees are adequately educated.

• Involves the employees in the certification of “Training and Certification of Occupational Health and Safety (AK3U) Specialist” held by BPJS Health.

During 2017, the Company implemented occupational safety and health management program to create a safe and comfortable working environment. The management programs are as follow: [GRI 102-11, GRI 103-3]

EMpLOyEE’S SAFETy MANAGEMENT pROGRAM

• Provides medical facilities in the form of regular Medical Check Up and medical treatment facilities, such as reimbursement of inpatient hospital treatment, outpatient care after discharge from the hospital, maternity costs, cost of dental treatment, replacement of glasses, hearing aids, laboratory tests, and other medical treatment recommended by doctor after hospitalization.

• Provides clinic facilities and doctors to provide medical services to employees and their families.

• Provides the employees and their families with health insurance organized by BPJS Health.

EMpLOyEE’S hEALTh MANAGEMENT pROGRAM


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Up to 2017, the Company has yet to establish the Occupational Health and Safety Committee (P2K3). However, in order to conduct management related to occupational safety and health, the Company has implemented the AK3U (General OHS Expert) certification which is intended to implement the Law of Occupational Safety and Health issued by the Ministry of Manpower and Transmigration of the Republic of Indonesia.

Certification materials related to occupational safety and health:1. Related to occupational safety:

- Sarana dan prasarana pendukung operasional gedung seperti lift, genset, AC, dan penerangan.

2. Related to occupational health:- Regular medical check-ups for employees- Supporting working equipment shall have no effect

on health- Employees’ rotation periodically to maintain their

psychological level

With optimum Company’s management of occupational health and safety, during 2017, there were no incidents of accidents experienced by male and female employees throughout the Company’s operational office (Zero Accident). There were no reports related to employees who often exposed to or at high risk of illness due to work activities. [GRI 403-2, GRI 403-3]

EMPLOYEE COMPLAINT MANAGEMENTIn order to create good relationships with employees, the Company takes into account complaints or reports related to violations of labor and human rights practices within the Company. This is stipulated in Directors’ Circular Letter No. 21/DIR/IAD/2014. [GRI 103-2, GRI 103-3]

With effective implementation and management of employment practices and human rights, in 2017, there were no reports of the employment practices and human rights violation, including discrimination incidents experienced by the Company’s employees. [GRI 103-2]



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Overview 2017






Conservation




Financial Literacy




9594

80,7%Customer Satisfaction Survey

10 COMMITMENT TO PROVIDE THE BEST SERVICES

Going into the 67th year, the Company is focused on transforming to provide the best service for customers, while accelerating the Company’s business performance.

The visitors of the exhibitions requested the information on house purchase through the BTN Micro Housing Loan, Source: Nurchamim


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95


For 67 years, the Company has always been providing the best banking services to customers and the community in Indonesia. During that time, the Company is focused on transforming to provide the best service for customers, while accelerating the Company’s business performance.

The Company has transformed gradually and successfully. In the first phase transformation, the survival periods, the Company established its position as the leader in the housing loan market. In the second phase of transformation, which started from 2015 until 2020, the Company stepped towards digital banking.

The Company must take a series of adaptation measures due to the dynamics of digitalization that affect the banking business activities. The Company releases various innovations to bring Bank BTN closer to the needs of increasingly complex customers but must be supported by transaction services and access banking products that are easy, cheap, and fast. Therefore, digital banking is one of the main solutions that needs to be optimized.

PROVIDING SUSTAINABLE AND INCLUSIVE PRODUCTS

In order to arakat. These products are created primarily to provide easy access to banking services, and improve the financial services to reach various layers of society in an inclusive way. The Company has provided various products that can provide social benefits for low-income communities (MBR). In addition, there are also products that are created in order to educate the public to use banking service, such as SimPel (Students Savings), which can encourage the culture of saving from an early age.

The table below shows the diverse range of Company’s products that reach various societies inclusively. [FS7]

Sustainable and Inclusive products [FS7]

product Description GoalsTotal of Collection or

Loan Disbursement (Rp Million)

Consumer BankingKPR BTN Subsidi Home Ownership program of the Ministry of Public Works

and People's Housing of the Republic of Indonesia) with low-interest rates and affordable installments for the purchase of Rumah Sejahtera Tapak (Landed Homes) and Rumah Sejahtera Susun (Modest Apartment).

Low-Income Communities (MBR)

20,504,547

KPR BTN Mikro Banking product for the ease of purchasing land or house, or home renovation in stages.

Customers working in the informal sector

75

Tabungan BTN Junior A savings product to educate children on saving. Children up to 12 years old.

769,632

Tabungan BTN Juara Saving for financial education and transaction in line with the needs of the young generation.

Youth between the age of 12 to 23 years old.

591,116



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9796

product Description GoalsTotal of Collection or

Loan Disbursement (Rp Million)

TabunganKu Individual savings with easy requirements to promote the saving culture and improve public welfare.

General Public 720,546

Tabungan Simpanan Pelajar (SimPel)

Saving for students with easy and simple requirements as well as interesting features, in order to educate and include finance to promote the saving culture since early stage.

Students 59,343

Tabungan BTN e-BATARAPOS

Easy and comfortable savings for the public because the transaction can be conducted online in all Post Office throughout Indonesia.

General Public 2,880,196

Tabungan BTN Cermat Saving that facilitates access and easiness of banking transaction through EDC and phone account throughout the country without having to go to Bank. This saving is a part of Laku Pandai Program.

Society throughout the country

28,366

Commercial BankingKredit Usaha Mikro dan Kecil (KUMK) BTN

Loan for customer who has productive business in line with the requirements of MSME. The loan may be utilized to fund the capital and/or investment with a maximum loan up to Rp5 billion.

Micro and Small Business (UMK) Actors

1,530,665

Program Kemitraan Program to increase the competence of small business in order to become strong and independent.

Small Business Actors 6,201

Kredit Usaha Rakyat (KUR)

Capital loan and/or investment granted to debtor in the MSMEs status, in a productive and viable business field, but do not have additional collateral or sufficient additional collateral.

Micro, Small, and Medium Enterprises (MSMEs)

9,775

Kredit Linkage BTN Loan to facilitate legal entities i.e. Rural Banks (BPR) and Cooperatives, to be disbursed to Micro, Small, and Medium Enterprises (MSMEs) sector.

Rural Banks and Cooperatives

48,076

Sharia Business unitKPR BTN Sejahtera iB BTN Prosperous iB Housing Loan is a BTN Sharia financing

product to purchase a house for Low-Income Communities (MBR) with low margin, low and fixed installments throughout the loan term, with a “Murabahah” (deed of sale) in order to own a House, Flat, or apartment as part of government program.

Low-Income Communities (MBR)

993,277

TabunganKu iB Saving product with Wadi’ah (Entrusted) principle which has attractive bonus. Issued simultaneously by banks in Indonesia in order to foster the culture of saving and to improve the public welfare.

General Public 3,323

Tabungan BTN Simpel iB Saving product destined for Students up to 17 years old who do not have Identity Card yet. The initial deposit is very small and it still gives lucrative bonus.

Student under 17 years old

1,733


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Conservation




Financial Literacy




97


DISCLOSURE OF PRODUCTS AND BANKING SERVICES INFORMATION

In order to support the excellent service, the Company has implemented a series of procedures to ensure that all information relating to banking products and services has been presented clearly, appropriately, and accurately, in accordance with Bank Indonesia Regulation No. 7/6/PBI/2005 on the Transparency of Bank’s Product Information and Use of Customer’s Personal Data. The Company provides disclosure of Banking products and services by providing information services characteristics of the bank’s products and services that can be accessed easily by the public on the Company website, i.e. www.btn.co.id.

INNOVATION OF PRODUCTS AND BANKING SERVICES

As an icon in housing finance in Indonesia, the innovation of banking products becomes a requirement that must be met by the Company. Various needs of the community shall be accommodated with the facilities owned by banks. Upon that consideration, to answer the needs of the community, Bank BTN launched several new banking products and services. The new products and services launched by the Company are the result of innovations from existing products. New products and services launched by the Company are as follows:

1. BTN Micro Housing Loan 2. Cooperation of BTN Housing Loan Support for Gojek

Partners3. B2B2C Development4. Document Imaging (Data Capture)5. Checking Subsidy6. ABCG (Academic, Business, Community, Government)

Scheme

In addition, in October 2017, the Company launched BTN ready! Savings. BTN ready! Savings has 1 to 15 years’ period, and equipped with insurance feature. The background for BTN ready! Savings launching was the needs of public to save routinely in order to realize their needs, complete with health, accident, and life protection so the planned fund will be realized in the future. The objective of this product is to meet the customers’ financial planning needs.

PRIORITIzING CUSTOMER PRIVACY AND DATA SECURITY

Referring to the provisions of Law No. 7 of 1992 on Banking, Law of the Republic of Indonesia No. 10 of 1998 on the Amendment to Law No. 7 of 1992, and Bank Indonesia Regulation No. 2/19/PBI/2000 on Requirements and Procedures for the Granting of Orders or Written Confidential Licenses of the Bank, related to client’s confidentiality, the Company is committed to continue maintaining the privacy and security of customer data on any banking transaction conducted. [GRI 103-2]

As a form of Company’s commitment in improving the information security and confidentiality to ensure the business and create operational activities that is better, safe, smooth, and auditable, as well as to maintain the bank trustworthy image, the Company has specific policy in the form of Directors’ Circular Letter No. 40/DIR/ICTD/2016 on Information Security Guidelines for PT Bank Tabungan Negara (Persero) Tbk. In this policy, it is stated the pre-requirements to ensure every confidential and sensitive information is protected from computer viruses as to minimize damage from computer viruses’ infiltration. The Company conducts various efforts to maintain customer data, i.e. installing software approved and updating it periodically, giving IT security training to the user who uses



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9998

IT resources, implementing management/standardization password to ensure access to the protected information. Given these policies and implementation, during 2017, there were no incidents of non-compliance related to privacy and loss of customer data. [GRI 418-1]

MARKETING COMMUNICATION

Effective and innovative marketing communications are necessary to achieve the maximum performance. The Company keeps perfecting the marketing strategy to adapt to the business environment development. The Company has marketing strategies as follow:

Company’s Marketing Strategies of Products and Services [GRI 103-2]

IMPROVING LOW-COST & SUSTAINABLE FUNDING

CLOSING THE GAP ON THE PRODUCTS AND SAVINGS

FEATURES

PRODUCT SALES ORGANIzATION IMPROVEMENT

STRENGTHENING MARKET SEGMENTATION ACCORDING

TO PRODUCT SEGMENTATION

STRENGTHENING AWARENESS THROUGH ATL & BTL

AGGRESSIVE COMMUNICATION

1. Developing and launching products and features

2. Reviewing policy3. Refining business process

1. Training and strengthening of funding people at the regional offices and branch offices, through various activities such as:• conference• calling• video call• directly

2. Achieving funding people3. Employees’ Performance

Tracking & Rewar

1. Promotion Program Above the Line, Below the Line, and Digital

2. Brand Awareness Research

1.StrengtheningtheAcquisitionImprovement Program and Maintaining Savings

2. Strengthening Business Alliance: WorkingonfulfillingtheSOEssupply chain

3. Strengthening the work program based on fee-based income

4. Recomposition of marketing target:• Focus on the Emerging

Affluent Customer Segmentation

• Focus the post on regular fundingacquisitionandtransfer or remittance

• Community-based approach

• SERBU BTN Activity• Thematic Program


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99


In carrying out its marketing communications activities, the Company always takes into account the principles and prevailing regulations. Thus, during the reporting period, there is no incident of non-compliance related to marketing communications, including advertising, promotion, and sponsorship. [GRI 417-3]

CUSTOMER COMPLAINT MANAGEMENT

Fast and effective handling and settlement of customer complaints are fundamental to provide the best customer service. This is a form of the Company’s commitment to

enhancing customer protection and ensuring the rights of customers in using the Bank’s services. The Company operates a 1x24 hours customer complaints service. In the management, customer complaint is managed and responded directly by the Company’s Corporate Secretary Division.

Referring to Bank Indonesia Regulation No. 10/10/PBI/2008 on Customer Protection, the Company provides various services to meet the customers’ expectations. One of which is to provide a customer complaints system that is able to monitor and help resolve customer complaints comprehensively.

Mechanism of Customer Complaint Management [GRI 103-2, GRI 103-3]

Receipt of Customer Grievance (End User)

Receipt of customer complaint notification

Receipt of customer complaint notification

Inquiry of customer complaint to SPN

See the detail of customer complaint in SPN

See the detail of customer complaint in SPN

Recorded at SPNDo we need to escalate to group

support?Coordination the complaint

progress

Deliver the progress to customerEscalation of complaint settlement

processData entry of the solution of the

complaint to SPN

Data entry of the Customer Complaint to SPN

Coordination of complaint settlement process

Deliver the registration number of the complaint to customer

Deliver the solution of the complaint to customer

Entry of the complaint settlement result

Closing the complaint - complaint

Receipt of Customer ComplaintSupervision of Handling Customer

ComplaintInterdivision Coordination to settle

the customer complaint

Yes

no

no

Yes



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101100

To support the customer complaint service, the Company has provided several complaints handling channels accessible through:

Customer Complaint Data 2017

Complaint Type 2015 2016 2017

Fund Raising 237 2,583 6

Fund Disbursement 1,392 1,309 1,046

Payment System 30,612 32,075 33,976

Other Products 2,220 4,828 3,534

Collaboration Products 2 0 1,489

Total 34,463 40,795 40,051

Throughout 2017, there were 40,051 complaints. 96.04% complaints are resolved, and the rest 3.96% are still in progress. The complaints amount decreased by 2% compared to 2016. .

Results of Customer Complaint Settlement 2017

Complaint Type2017

Total On progress % Finished %

Fund Raising 6 9 0 6 100

Fund Disbursement 1,392 128 12.25 918 87.77

Payment System 30,612 1,168 3.44 32,808 96.56

Other Products 2220 276 7.81 3,258 92.19

Collaboration Products 2 15 1.01 1,474 98.99

Total 40,051 1,587 3,96 38,464 96,04

1. Head Office of PT Bank Tabungan Negara (Persero) Tbk. Menara Bank BTN Lt. Jl.GajahMadaNo.1Jakarta10130 Phone: (021) 6336789 Fax:(021)63367192. Contact Center dengan nomor 1500 2863. Email Contact Center: [email protected]


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101


The Company constantly improves banking services and security at every service facility to ensure the security and comfort of its customers in performing transactions. Therefore, during 2017, the Company is not liable and does not violate any laws and regulations regarding the provision and use of banking products and services. [GRI 419-1]

CUSTOMER SATISFACTION SURVEY [GRI 103-3]

The Company cooperates with third parties to conduct the customer satisfaction survey. The survey is conducted by using qualitative and quantitative approaches. The Company uses in-depth interview method for qualitative approach, and face-to-face interview method for quantitative approach. The following is the results of customer’s satisfaction survey in 2017.

Result of Customer’s Satisfaction Survey in 2017 [GRI 102-43]

year Survey Result

2015 78.9%

2016 78.3%

2017 80.7%

In 2017, the Customer satisfaction survey resulted in an 80.7% score, which increased by 2.4% compared to the result of the survey in 2016. In accordance with the commitment to provide excellent service to our customers, the Company will continue to improve the accessibility of the services provided and provide products that meet the needs of our customers.

Source: Dedi Gunawan



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103102

1,692,723Internet Banking TransactionsIncreased by 111.71%

12,000 participantMURI record as pioneer of property entrepreneurship literacy with the most participants in Indonesia

Launching of TCASH-BTN Cermat Service

Rp1,508,232 millionDisbursement of MSME credit increased by 48.88%

Provision of Housing Loan Facility for Informal Worker

11 PROGRAM STRENGTHENING OF INCLUSION BANKING AND FINANCIAL LITERACY

Perseroan senantiasa menerapkan program pemerintah dalam penguatan inklusi produk dan layanan keuangan yang bertujuan untuk mendukung tercapainya tujuan pembangunan berkelanjutan dalam mengurangi kesenjangan sosial dan memacu pertumbuhan ekonomi Indonesia.


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103


Accessibility to reach financial service (financial inclusion) is a right to all members of a community because it can improve the standard living of communities and reduce the gap level in order to support Indonesia economic growth. Financial inclusion continues to be an important concern in the financial sector due to the existing community groups in the bottom of the pyramid, i.e. those with low and unstable income, living in remote areas, handicapped, and laborers without no legal identity documents, as well as marginalized communities who are categorized as unbanked.

In 2016, Financial Services Authority (OJK) has conducted Financial Literacy and Inclusion National Survey (SNLIK), which aimed as guidance for OJK and financial service industry in conducting activity for financial literacy and inclusion of community in Indonesia. The survey result showed that the index of financial literacy and inclusion in Indonesia in 2016 increased, compared to 2013, i.e. financial literation index from 21.84% to 29.66%, and financial inclusion index from 59.74% to 67.82%. This increase is a result of the hard work of OJK and Financial Service Industry (IJK), which continue to sustainably increase financial literacy and inclusion in the community.

As one of the players in banking industry, the Company actively engages in supporting government program in strengthening of financial inclusion through the launching of TCASH-BTN Cermat service, provision of housing loan facility for informal workers, support for the development of Micro, Small and Medium Enterprise (MSMEs), strengthening of financial service in provinces with low population and underdeveloped economic, development of digital banking service, and financial literacy program. Thes various initiatives are expected to support the achievement of sustainable development goal to reduce social gap and drive Indonesia economic growth.

LAUNCHING OF TCASH-BTN CERMAT SERVICE [FS7, FS16]

Since 2010, the Company has an initiative to encourage the financial inclusion service through BTN Cermat Savings in Laku Pandai program. This service is designed to facilitate community who do not have saving account yet to easily open an account with simple requirement and without monthly administration fee.

Further, on May 25, 2015, the Company improved the BTN Cermat Savings by launching the card-based BTN Cermat Savings. The account is opened by using an EDC (Electronic Data Captured). The customer may simply bring a copy of legal identity card (National Identity Card or Driver’s License) and initial deposit as low as Rp10,000 to open a savings and obtain an ATM Card to be used for transaction. The purpose is to give branchless financial service in the form of provision of savings product to community who do not have access yet to financial service.

On October 22, 2015, the Company developed the product through the launching of BTN Cermat Ponsel by using USSD (Unstructured Supplementary Service Data) system. The customer can simply dial *144*1# from a mobile phone to open an account. By launching Laku Pandai savings using USSD platform, the Company is one step closer towards the digital banking era and affirms itself to be a Bank that uses two platform devices in Laku Pandai program, i.e. EDC and USSD.

In 2017, the Company proved its support again in sustainable product development by launching TCASH-BTN Cermat service. This service is a collaboration between the Company and Telkomsel. This service facilitates customers to perform transfers or sending money from BTN Cermat to e-money Telkomsel TCASH and vice versa. This service is a combination of benefit from TCASH electronic money service with Tabungan BTN Cermat, which presents the first linked financial service between SOEs, and as a form of partnership to support SOEs synergy. Through partnership with Telkomsel, which has 178 million customers and



Development Goals


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105104

400,000 national distribution network, the Company expects the collaboration can further encourage the unbanked community reach, especially in the financial inclusion.

In order to reach the unbanked community, the Company has branchless financial service, in the framework of financial inclusion (Laku Pandai). At the end of 2017, the Company recorded 6,219 Laku Pandai agents, with third-party fundraising (DPK) of Rp28,366 million. The number of accounts owner reached 951,872 customers at the end of 2017, which increased by 0.03% from 2016, i.e. 951,592 customers.

Number of Accounts or Customers of Tabungan BTN Cermat

939,755

2015

951,592

2016

951,872

2017

PROVISION OF HOUSING LOAN (KPR) FACILITY FOR INFORMAL WORKERS [FS7, FS16]

The Company strives to act strategically in the provision of banking product and services, which shall reach all community levels, especially low-income community, and informal worker. In May 2017, the Company provides exclusive housing loan (KPR) for GO-JEK partner in order to reach community who do not have houses yet and to succeed One Million Houses Program. The excellence of this credit facility is low interest and its easy installment scheme i.e. lower than Rp50,000 per day. The Company will provide access to Housing Loan for 27,000 GO-JEK partners in 14 cities in Indonesia. In the first year, the Company starts providing the Housing Loan access for GO-JEK partners around Jabodetabek. This credit has positive responses, which is reflected in the 9,000 GO-JEK partners that immediately submitted the request for this product.


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105


In addition to facilitating Housing Loan for GO-JEK partners, the Company also provides BTN Micro Housing Loan for other informal workers. The product is expected to answer the house financing needs for the low-income community (MBR) especially workers in the informal sector. However, the Company takes initiative to target the MBR segment. BTN Micro Housing Loan is not a part of the government’s funding aid for the One Million Housing program.

BTN Micro Housing Loan targets family or individual who has an average income of Rp1.8 to Rp2.8 million per month. This community segment is in need of housing financing access, because they do not fit in the category of Subsidized Housing Loan, in the scheme of Housing Financing Liquidity Facility (FLPP) and Interest Subsidy (SSB), and also in Advance Payment Subsidy (SBUM), which are disbursed by Government. The target debtor is informal workers who are a member of an association or community. At the initial stage of BTN Micro Housing Loan launching, the Company’s debtor target is traders who are members of Mie Bakso Seller Association (APMISO). In addition to food sellers, the Company also targets fishermen, farmers, craftsmen, and workers in the informal sector.

Informal workers can have houses with maximum credit ceiling of Rp75 million and 20 years tenor by using BTN Micro Housing Loan. BTN Micro Housing Loan offers financing scheme with the amount of down payment and installment suited to the worker’s ability. The Company’s strategic step is in line with financial inclusion to reach more Indonesian community in accessing banking service.

SUPPORT FOR MICRO, SMALL, AND MEDIUM ENTERPRISES (MSMES) DEVELOPMENT

Micro, Small, and Medium Enterprises (MSMEs) have strategic role as the instrument in the national economic development. The development and productivity of MSMEs are inseparable from the banking support in disbursing credit to MSMEs. Therefore, the Company, as one of player in banking industry continually takes part in providing wide access to all members of community, especially in providing capital to encourage the development of Micro, Small, and Medium Enterprises (MSMEs) in all feasible economic sector, for investment financing and/or working capital, to execute and develop its business pursuant to Bank Indonesia Regulation No. 14/22/PBI/2012 on Credit/Funding Disbursement and Technical Assistance by Commercial Banks for MSMEs Development.

In 2017, the Company has incurred Rp1,508,232 million of MSMEs credit, which increased by 48.88% from 2016, i.e. Rp9,530 million. DISBURSEMENT OF MSMES CREDIT BY ECONOMIC SECTORFor three consecutive years, the Company disbursed the largest portion of MSMEs credit to the construction sector. This is in line with the Company’s main business in housing loan. In 2017, the Company has disbursed Rp945,390 million to the construction sector, which increased by 66.48% from 2016, i.e. Rp567,879 million.



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107106

Company’s MSMEs Credit Disbursement by Economic Sector (Rp Million) [FS6, FS7]

Economic Sector

Number of Disbursement

2015 2016 2017

plafond s.d. 100 million

plafond 100

Millions.d. 500

million

plafon 500

Millions.d. 5 Billion

Totalplafond s.d. 100 million

plafond 100 Millions.d.

500 million

plafon 500


Totalplafond s.d. 100 million

plafond 100 Millions.d.

500 million

plafon 500


Total

Agriculture, Hunting and Forestry

305 1,085 - 1,390 32 350 - 382 - 325 - 325

Fishery - 200 - 200 60 - - 60 - - - -

Mining and Excavation - 550 8,976 9,526 - 120 8,299 8,419 - - 50 50

Processing Industry 147 4,706 36,932 41,785 - 2,947 13,370 16,317 155 2,371 10,679 13,205

Electricity, Gas and Water 75 730 21,522 22,327 - 2,095 18,029 20,124 - 4,183 66,583 70,766

Construction 164 19,518 255,541 275,223 - 15,301 552,569 567,870 - 26,397 918,993 945,390

Wholesale and Retail Trade 2,681 24,459 150,698 177,838 818 25,951 149,903 176,672 214 22,317 209,688 232,219

Accommodation and Food Service

- - - - - 250 7,099 7,349 - 394 3,637 4,031

Transportation, Warehousing and Communication

156 301 300 757 79 250 300 629 50 359 500 909

Real Estate, Rental Business and Company Service

725 16,929 75,155 92,809 80 18,158 76,863 95,101 - 17,536 115,706 133,242

Education Service - 1,005 3,057 4,062 - - 3,283 3,283 - - - -

Health Service and Social Activity

- 735 720 1,455 - - - - - - - -

Public Service, Social and Culture, Entertainment and Other Independent Service

89 926 18,125 19,140 134 2,510 92,296 94,939 50 2,161 99,254 101,466

Activity with Indeterminate Definition

373 7,268 41,589 49,230 125 6,507 15,267 21,899 50 1,641 4,938 6,630

Total 4,714 78,412 612,616 695,742 1,328 74,438 937,280 1,013,045 519 77,685 1,430,028 1,508,232

DISBURSEMENT OF MSME CREDIT BY PROVINCEThroughout 2017, the Company provided access to financial service in the form of MSMEs credit disbursement to 31 provinces in Indonesia. In 2017, Special Capital Region of Jakarta has the largest portion of the Company’s MSMEs credit disbursement at Rp404,199 million, which increased by 20.98% from 2016, i.e. Rp334,112 million.


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Company’s MSMEs Credit Disbursement by Province (Rp Million) [FS6, FS7]

province


2015 2016 2017

plafond s.d. 100 Million

plafond 100 Million

s.d. 500 Million

plafon 500 Million

s.d. 5 Billlion

Totalplafond s.d. 100 Million

plafond 100 Million

s.d. 500 Million

plafon 500 Million

s.d. 5 Billlion

Totalplafond s.d. 100 Million

plafond 100 Million

s.d. 500 Million

plafon 500 Million

s.d. 5 Billlion

Total

Nanggroe Aceh Darussalam

105 2,040 2,401 4,546 - 860 6,100 6,960 - 2,190 8,635 10,825

Sumatera Utara - 190 38,938 39,128 - 136 49,305 49,441 - 608 101,411 102,019

Sumatera Barat - 806 16,549 17,355 - 1,901 15,690 17,592 - 946 18,838 19,784

Riau - 285 3,400 3,685 - - 11,475 11,475 - - 23,465 23,465

Jambi 109 4,868 3,951 8,928 - 15,169 3,251 18,420 - 17,149 9,763 26,912

Sumatera Selatan - 720 3,155 3,875 - 490 2,575 3,065 - - 23,580 23,580

Bengkulu 154 3,675 3,050 6,879 100 1,886 7,806 9,792 - 1,410 19,821 21,231

Lampung - 345 6,312 6,657 - - 6,147 6,147 - 500 14,468 14,968

Kepulauan Riau 157 2,445 10,803 13,405 - 810 21,804 22,614 - 500 17,340 17,840

Bangka Belitung - 520 - 520 - 385 6,010 6,395 - 2,370 14,815 17,185

DKI Jakarta 190 9,078 149,875 159,143 100 10,884 323,128 334,112 50 9,483 394,666 404,199

Jawa Barat 1,055 11,973 167,954 180,982 255 16,756 220,796 237,807 81 17,192 324,704 341,977

Jawa Tengah 422 2,811 8,639 11,872 - 1,894 17,973 19,866 - 3,205 56,305 59,510

D.I. Yogyakarta 50 2,743 3,530 6,323 - 373 8,574 8,947 - 225 18,227 18,452

Jawa Timur 1,083 13,221 30,546 44,850 133 5,363 72,766 78,261 155 6,366 110,781 117,302

Banten 689 7,102 90,244 98,035 194 11,451 56,613 68,258 - 6,449 48,073 54,523

Bali - 110 7,925 8,035 - - 12,510 12,510 - - 14,470 14,470

Nusa Tenggara Barat - 1,768 5,430 7,198 185 2,304 12,438 14,927 50 1,304 20,215 21,569

Nusa Tenggara Timur - 2,355 23,230 25,585 112 642 31,292 32,046 83 915 38,011 39,009

Kalimantan Barat - 650 800 1,450 - - 4,100 4,100 - - 9,500 9,500

Kalimantan Tengah 160 300 956 1,416 - - 2,570 2,570 - - 5,078 5,078

Kalimantan Selatan 125 2,650 5,850 8,625 - 450 2,070 2,520 - 3,780 11,220 15,000

Kalimantan Timur 110 630 1,203 1,943 249 - 15,752 16,001 - - 26,689 26,689

Sulawesi Utara - 350 1,131 1,481 - 250 - 250 - - 1,000 1,000

Sulawesi Tengah - 725 5,900 6,625 - 680 1,810 2,490 50 495 6,567 7,112

Sulawesi Selatan - - - - - - 7,490 7,490 - - 32,178 32,178

Sulawesi Tenggara 105 860 4,502 5,467 - - 8,750 8,750 - - 13,274 13,274

Gorontalo 10 982 - 992 - 1,086 1,958 3,044 - 520 12,624 13,144

Maluku 106 2,596 600 3,302 - 319 - 319 50 1,188 - 1,238

Maluku Utara - 1,214 15,043 16,257 - 150 4,526 4,676 - 590 24,860 25,450

Papua 85 400 700 1,185 - 200 2,000 2,200 - 300 9,450 9,750

Total 4,714 78,412 612,616 695,742 1,328 74,438 937,280 1,013,045 519 77,685 1,430,028 1,508,232



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In addition to provision of MSMEs credit, in 2017, the Company provides Micro Credit Program (KUR) disbursement. KUR is a credit or working capital financing and/or investment to productive and viable individual

debtor, business entity, and/or business group, which have insufficient collateral or do not have additional collateral yet. Throughout 2017, the Company has disbursed Rp9,775 million fund to 30 debtors.

KUR Disbursement by Economic Sector [FS6, FS7]

Economic Sector


KuR Mikro (0 s.d. 25 Million)

KuR Ritel (25 Millions.d. 500 Million) Total

plafond (Rp Million) Debtors plafond

(Rp Million) Debtors plafond (Rp Million) Debtors

Agriculture, Hunting and Forestry - - 200 1 200 1

Mining and Excavation - - 500 1 500 1

Processing Industry - - 150 1 150 1

Electricity, Gas and Water - - 3,600 8 3,600 8

Construction - - 3,275 10 3,275 10

Wholesale and Retail Trade 25 1 300 2 325 3

Financial Intermediary - - 700 2 700 2

Health Service and Social Activity 25 1 - - 25 1

International Agency and Other External International Agencies

- - 1,000 3 1,000 3

Total 50 2 9,725 28 9,775 30

KUR Disbursement by Province [FS6, FS7]

province


KuR Mikro (0 s.d. 25 Million)

KuR Ritel (25 Juta s.d. 500 Million) Total

plafond (Rp Million) Debtors plafond

(Rp Million) Debtors plafond (Rp Million) Debtors

DKI Jakarta - - 3,000 9 3,000 9

West Java - - 2,600 6 2,600 6

Central Java 25 1 975 4 1,000 5

D.I. Yogyakarta - - 400 1 400 1

East Jawa 25 1 1,150 4 1,175 5

Banten - - 300 1 300 1

West Nusa Tenggara - - 400 1 400 1

East Nusa Tenggara - - 500 1 500 1

East Kalimantan - - 400 1 400 1

Total 50 2 9,725 28 9,775 30


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STRENGTHENING OF FINANCIAL SERVICE IN LOW POPULATION PROVINCES AND DISADVANTAGE REGIONSIn the spirit of supporting the financial inclusion strengthening, the Company provides access to financial service in low population provinces. Low population level is determined by measurement standard with population density level below 20 people per km2. Based on that standard and Population Density data from Statistics Indonesia (BPS) in 2015, the provinces with low population are Central Kalimantan, North Kalimantan, West Papua, and Papua.

In 2017, the Company provided access to financial service in Central Kalimantan and Papua. However, North Kalimantan and West Papua have not yet received the same access. The Company provides access point or access to financial service in the form of Branch Offices, Sub-Branch Offices, Cash Office, Cash Offices Level Service Offices, and ATM. The Company provides the access point for low population. Thus, the financial service index reaches 53,561, which means that one financial access point is capable of serving an average number of 53,561 people.

Furthermore, the Company also provides financial service access in disadvantaged region. President Jokowi has established regencies in the disadvantaged region. The establishment is stipulated in Presidential Regulation (Perpres) No. 131/2015 on the Disadvantages Region Establishment 2015-2019. The indicators to established the disadvantages region are the economy, human resource, facilities and infrastructures, regional finance, accessibility, and regional characteristic.

BTN has provided financial service access in 15 disadvantages regencies, i.e. Bondowoso, Situbondo, Bangkalan, Sampang, Pandeglang, West Lombok, Central Lombok, East Lombok, Sumbawa, Kupang, Ketapang, Sintang, North Gorontalo, Central Mamuju, and Sorong Regencies. The Company provides access point or access to financial service in the form of Branch Offices, Sub-Branch Offices, Cash Office, Cash Offices Level Service Offices, and ATM. The Company provides the access point for disadvantaged regions. Thus, the financial service index reaches 367,168, which means that one financial access point is capable of serving an average number of 367,168 people.

The Company’s Network Access Index in Low Population Provinces [FS13]

province population*

Access point

Branch Office

Sub-Branch Office Cash Office

Cash Offices Level Service

OfficesATM Total Access

Index**

Central Kalimantan

2,183,668 1 3 2 40 12 58 37,649

Papua 3,265,202 1 3 2 30 11 47 69,472

Average 53,561 53.561

*Population based on Statistics Indonesia (BPS) Data**Access Index = Population / Number of Access Point



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The Company’s Network Access Index in Disadvantages Regional in 2017 [FS13]

Regency population*

Access point

Branch Office

Sub-Branch Office Cash Office

Cash Offices Level

Service Offices

ATM Total Access Index**

Bondowoso 736,721 - - 1 - 1 2 368,361

Situbondo 669,713 - - 1 - 1 2 334,857

Bangkalan 937,497 1 2 3 39 17 62 15,121

Sampang 884,204 - - 1 - 1 2 442,102

Pandeglang 1,200,512 - - - - 1 1 1,200,512

Lombok Barat 644,586 2 - 1 - 13 16 40,287

Lombok Tengah 912,879 - - 1 - 2 3 304,293

Lombok Timur 1,173,781 - - - - 1 1 1,173,781

Sumbawa 445,503 - - - - 1 1 445,503

Kupang 360,228 1 1 1 32 6 41 8,786

Ketapang 485,118 - - - - 1 1 485,118

Sintang 396,392 - - - - 1 1 396,392

Gorontalo Utara 104,133 - - - - 1 1 104,133

Mamuju Tengah 105,495 - - - - 1 1 105,495

Sorong 82,784 - - - - 1 1 82,784

Average 367,168

* Population based on Statistics Indonesia (BPS) Data* Access Index = Population / Number of Access Point

THE DEVELOPMENT OF DIGITAL BANKING SERVICESIn 2017, the Company transformed its business based on the digital banking. This transformation is necessary to face the high competitiveness in banking industry, and to increase service to customer and community. In addition, this digital technology utilization is believed to be able to improve the banking efficiency. This is evidenced by Indonesia Banking Award (IBA) 2017, as the Company received an award as The Most Efficient Bank.

In 2017, the Company’s acceleration of digital transformation stage is by providing smart branch facility, i.e. one smart branch in Branch Office and three smart branch in Sub-branch Offices. These Smart Branches are equipped with various services to facilitate the customer’s needs in obtaining the banking information, conducting communication, registration, and opening accounts, as well as conducting non-banking transactions. The smart branch will increase efficiency, productivity, and provide


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services faster, better, and easier for customer. Bank BTN Smart Branch is equipped with various services to facilitate the customer’s needs in obtaining the banking information, conducting communication, registration, and opening accounts, as well as non-banking transactions.

Digital branch office offers more various banking product and services, i.e. Cash Deposit Machine (CDM), Internet Banking, Cash Management, SMS Banking, and Mobile Banking. Every year, the number of digital banking service transaction increases. As recorded in 2017, the number of internet banking transaction increased by 111.71% compared to 2016. This indicates higher demand from the community for digital banking service that supports the implementation of branchless banking.

In 2017, the Company also launched digital solution i.e. banking application for smartphone, in addition to internet banking. This application is available on playstore/appstore. This application facilitates the customers to pay insurance/credit card bill, to transfer and pay e-commerce purchase, which currently is the consumer’s shopping trend, and also to top up digital payment such as gopay, grabpay, etc.

Further, in 2017, the Company optimized the digital banking for millennial generation by opening six spots of BTN Zone in Unsyiah, Unesa, Undip, UNS, UGM, and USU. The objective is to introduce digital banking to college student. BTN Zone provides access to college student to connect to the internet, learn about the Company’s banking product, and directly feel the transaction ease by digital solutions application, which shall encourage cashless society.

Electronic Channel Services

Services Data 2015 2016 2017

ATM and KiosK

ATM 1,830 1,964 1,964

ATM Transactions 41,111,139 72,191,957 85,673,578

Mobile ATM 10 10 23

Cash Deposit Machine (CDM) CDM Transactions 124,613 143,073 150,602

Internet Banking Internet Banking Transactions

251,757 799,542 1,692,723

Cash Management Cash Management Transactions

798,154 763,641 1,006,733

SMS Banking SMS Banking Transactions

4,942,511 3,957,008 4,342,884

Mobile Banking Mobile Banking Transactions

7,413,767 15,828,032 22,800,139



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BTN pROpERTy pORTAL BENEFITS

1. Easiness in finding and booking a house unit

2. Easiness in submitting the loan requestapplication

3. Easiness in interacting/communicating

4. Enhancing user insight to property

1. Improving marketing

2. Reducing fund/promotion cost

3. Monitoring the houses stock

1. Expandingcredit

2. Improving collaboration

3. Improving income

4. Making the process more efficient

5. Maintaining and improving Bank BTN’s image as a bank with focus on housing

BTN pORTAL pROpERTy

The Company synergizes the digital banking with the featured product, i.e. Housing Loan through the presence of BTN Property Portal. This service is in the form of website, which gives simplicity for debtor candidate to request for housing loan online. This is in line with the motto of BTN Property Portal, i.e. Easy Solution to Own a House.

In 2017, the online Housing Loan proposal is 13,860 applications, which increased significantly by 228.83% from 2016, i.e. 4,215 applications. This year, the realization increases by 156.30% or equivalent to 3,214 units, from 1,254 units in the previous year.

vISION AND MISSION OF BTN pROpERTy pORTAL

VisionThe Biggest Online Property Portal in Indonesia

MissionTo provide education, facilitation, and convenience for Indonesian community to own property through latest technology support and quality service.

BANKDEVELOPERUSER


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Contents and Features of BTN Property Portal

Content Feature Search Info

1. Online Submission2. Community3. News and Information4. Education5. About (Contact Us)

1. Info and Advertisement Banner2. Housing Loan Consultation3. Housing Loan Simulation4. Cooperation Application5. Live Chat 24/7

1. Searching for House2. BTN Auction3. Simulation4. Market Price Range

BTN SimPel Savings Number of Accounts

PROPERTY ENTREPRENEURSHIP LITERACY TRAINING [FS16]As a commitment to improving the property sector, the Company focuses not only in housing or construction financing, but also on the human resources development, especially for developers, through Housing Finance Center (HFC). This HFC has been established in October 2014. The inauguration of HFC secretariat conducted in April 2015. HFC has three main activities, i.e. Research (Information Center and innovation of housing finance in Indonesia through various scientific studies related to market, business actors, and housing industry trends), Learning (Indonesian education center for housing finance, through various forms of education and training programs), and Advisory (Center for property consultancy and housing finance in Indonesia to assist stakeholders, i.e. communities, developers, government in decision making)..

19,371

2015

457,880

2016

494,424

2017

FINANCIAL LITERACY PROGRAM

In order to improve community and customer’s knowledge related to proper financial management, the Company conducts financial literacy program with reference to Financial Services Authority Circular Letter No. 1/SEOJK.07/2014 dated February 14, 2014, on Education for Financial Literacy Improvement to Consumers and/or the Public. In 2017, the Company has various financial literacy program, i.e. BTN SimPel Savings, ‘Property Entrepreneurship’ Literacy Training, and Community Education Program. [GRI 103-2]

BTN SIMPEL SAVINGS [FS16]The Company as one of player in financial service industry, supports the government program through Financial Service Authority (OJK) to build culture of savings, which cultivated from the early years by providing product Student Savings (SimPel/SimPel iB). The target of this product is the students. It has easy and simple requirements, free administration fee, and has many interesting feature. This product is expected to encourage the students to develop culture of savings in relation to financial education and inclusion.

In 2017, BTN SimPel Savings reached 494,424 NOA (Number of Accounts), which increased by 7.98% from 2016, i.e. 457,880 accounts. The Volume of Account amounted to Rp59,343 million, which increased by 27.06% from 2016, i.e. Rp46,704 million.



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BTN HFC Learning Function

HFC maintains education and training with curriculum designed to create new developers and improve existing skills of developers

Objective:To improve existing developer’s skillset to proficient level and strengthen business networking

Program:1. Master Developer Indonesia (MDI)2. Roadshow MDI

Objective:To educate young developer with sufficient skillset

Program:1. Mini MBA in Property2. Inhouse Mini MBA in Property

Objective:To mould new housing developers

Program:1. Literacy Education for 10,000

Young Enterpreneur in Property2. Property Outlook Seminar3. Socialization of Research Results

at HFC Website

ADVANCE

BASIC SKILL

LITERACY ACTIVITY


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In 2017, the Company encourages the birth of entrepreneurial property candidates through Housing Finance Center and conducts training by engaging various educational institution in Indonesia. This series of property literacy program includes association and community such as Real Estate Indonesia (REI), Association of Residential Developers Throughout Indonesia (APERSI), and all HFC members who have successfully pursued careers in the property world. At the end of 2017, the Company has conducted this program on 27 campuses with the theme of “Recruiting 10,000 young property entrepreneurs to build 1,000,000 houses in Indonesia Archipelago”. The objective is to give education to participants about details in property industry, starting from capital, regulation, to opportunity and challenge in building property business from the ground up, and socialization about the role of the Company in encouraging the progress of property sector.

With the program’s implementation, on October 30, 2017, the Company recorded a World Record Museum Indonesia (MURI) record as an organizer as well as a pioneer of property entrepreneurship literacy with the most participants in Indonesia, i.e. 12,000 participants.

In addition to the literacy program on campus, in 2017, the Company conducted Mini MBA in Property program, i.e. a program (educational institution) in property, which is a cooperation between Bank BTN HFC with School of Business and Management Bandung Institute of Technology (SBM-ITB) to create new entrepreneur in property industry and literacy property program. The subjects are related to property business, such as public policy, legality, land acquisition, project development, property financing, and also property sales and marketing strategy.

COMMUNITY EDUCATION PROGRAM [FS16]Throughout 2017, the Company carried out various education programs for the customers and the community to help provide clear information related to banking products and services, by which they will be able to use banking products according to their needs. In addition, this education program also aims to help the community to be able to set up their financial planning properly and correctly. The education programs in 2017 include:



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STuDENTS uNDERSTAND ThE INDONESIA ARChIpELAGO

Students Understand the Indonesia Archipelago Program (SMN) is an initiative program of the Ministry of State-Owned Enterprises (SOEs), which started in 2015. This program aims to cultivate pride as a nation with diverse Archipelago, through information and cultural exchange process. In addition, this program also takes part in building understanding of the stakeholders about the role of the Ministry of SOEs and SOEs in National Capacity Building through the nation’s younger next generation.

As an SOE, in 2017, the Company has conducted SMN by sending 20 students (two of which are disability students and schooled in SLB) from some Gorontalo High School to Pontianak for one week through selection system based on set criteria (requirement). During the trip to Pontianak, participants are divided into few groups with 3-5 students per group and every group lived together with foster family who are native people. The participants are accompanied by Provincial Education Office (one person), Role-Teacher of Provincial Level (two persons), and a Company’s representative.

In addition, the Company invited the SMN participants to visit Smart Branch to understand the development of digital banking. In the program, the Company also conducted financial literacy education activity especially banking product to some students by inviting them to see the smart branch in the Company’s head office. In that event,

the students were given explanation on the products and services on digital banking, starting from how to know which products and services are available in the Company’s smart branch, up to the simulation process on opening a saving account.

The explanation was not limited to the BTN Smart Branch definition. There was one SMN student representative who created an account, by registering and filling the data at the Smart Branch menu. In addition, some SMN students were directed to obtain information on service convenience and the Company’s feature through BTN Smart Branch. They were also given the explanation of the virtual reality, which allows people to shop more easily.


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BuMDES AND AGRICuLTuRE ENTREpRENEuRShIp pROGRAMS

To improve the people’s welfare and economy, the Company implements BUMDes (Village-Owned Enterprise) and Farmers’ Entrepreneurship. BUMDes and Agriculture Entrepreneurship are some of the priority programs initiated by the Ministry of Village, Development of Disadvantaged Regions, and Transmigration (Kemendes PDTT), in cooperation with the Ministry of Agriculture, Ministry of SOEs, SOEs, and SOEs Banking. These programs’ objective is to finance BUMDes business, thus encouraging villagers to manage the economy autonomously. The Company as an SOE Bank, is involved as an accelerator in corporate agriculture and develops BUMDes by providing financing schemes support to provide management training and access to financial inclusion to BUMDes.

During 2017, the Company has established Mitra BUMDes Kabupaten (MBK) at Pandeglang on October 3, 2017, signed Memorandum of Understanding, and provided socialization & training in Serang Regency on November 9, 2017. The MoU is a policy of the central government and the Company to have a target area in order to optimize and mobilize BUMDes.

In 2017, the Company with other SOEs has prepared and cooperated to realize Agriculture Entrepreneurship program. The preparation stage includes licensing, capital, organizational structure, human resources, infrastructure, and distribution of Farmers Card. Further, in 2018, the Company will finance potential farmers and conduct selection process of KUR to selected farmers, and continuously provide assistance and training to run the entrepreneurship programs well.



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AGRICuLTuRE ENTREpRENEuRShIp SChEME

Production facilities supply

Seed Supply

Fertilizer SupplySOEs in

Agriculture

SOEs in Animal Husbandry

SOEs in Agro Industry

SOEs in Fertilizer Industry

• Purchase of fertilizer, seed, and production facilities

• Sales of crops

• Payment of fertilizer, seed, production facilities, and insurance

• Disbursement of the sale of crops

• Loan disbursement• PPOB facility

All transaction data is connected to the

internet through Telkom network

SOEs in Communication

Financing and provision of payment facilities

Bank BTN and other SOEs Bank

SOEs in TradingSOEs in Logistic SOEs in Logistic ManagementSOEs in Insurance

Sales Channeling

Sales of cropsLogistic Transportation

Supply Insurance

PT Mitra BUMDes Bersama


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Through “State-Owned Enterprises for the State”, in 2017, the Company support Welder Vocational Education program, i.e. A training program for welder as the cooperation with PT PAL (Persero). The target for this training program is students from Papua and West Papua.

In 2017, 10 students attended this training. On this training, they learned about the technical side of welding at PT PAL (Persero) Surabaya. At the end of the program, they were certified by BSNP (National Education Standards Agency) and BKI (Indonesian Classification Bureau). This program is a form of Company’s care in supporting the availability of reliable welder

WELDER vOCATION

Training to improve welding competence in the aspects of knowledge and skill, thus it will meet the standards.

Training of Mental, Physical, and Entrepreneurship provided for participants to improve the attitude to defend the state and and the entrepreneurship as a welder.

Certification is the evidence for participants who have completed training, debriefing, and passed the competency test of the welder.

1

2

3

WELDER VOCATION PROGRAM

SCOPE

Rp20,029 Million Community Development Program Disbursement in 2017

Rp5,148 Million CSR Fund Disbursement Realization in 2017

Rp6,201 Million Partnership Program Fund Disbursement in 2017

Rp26,144 Million PKBL Program Disbursement in 2017

12 SUPPORT FOR ENHANCING THE COMMUNITY’S QUALITY OF LIFE

As one of the largest state-owned banks in Indonesia, Bank BTN has two major responsibilities, i.e. to increase profit in order to promote the nation’s economic development, and to carry out social and environmental responsibility.



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As one of the largest state-owned banks in Indonesia, Bank BTN has two major responsibilities. First, to increase profit in order to promote the nation’s economic development, and second, to carry out social and environmental responsibility. The second responsibility has been regulated in the Minister of SOEs Regulation No. PER-03/MBU/2/2016 dated December 21, 2016, on State-Owned Enterprises Partnership and Community Development Program. [GRI 103-2]

For the Company, implementing the Partnership and Community Development Program (PKBL) is equal to strengthening the Company’s commitment to continuously support the improvement of people’s lives while promoting national economic growth. The Company’s PKBL Programs focus on education, health, employment, welfare, and environment. [GRI 413-1]

CSR VISION AND MISSION

COMPANY’S CSR PROGRAM IMPLEMENTATION [GRI 413-1]

The Company’s CSR program is implemented in accordance with Law No. 40 of 2007 on Limited Liability Companies and Law No.1 of 2013, and it is also guided by Directors’ Regulation No. 29/PD/DSP/2008 on PT Bank Tabungan Negara (Persero) Tbk’s Corporate Social Responsibility. CSR program implementation is a concrete manifestation of the Company to contribute to the creation of sustainable development goals. Company’s CSR Program includes PKBL. The objective of the program is to improve the community’s quality of life and empower the community’s economy to create independent community in the target areas. Consistently, the Company conducts CSR programs that are focused on donating to charity and social purposes in the form of cash or goods, to beneficiaries outside PKBL. The recipients of donations are the communities that are located in the Company’s operational areas, the education organizational committees, non-governmental organizations (NGOs), or charities and social agencies. [GRI 103-2]

BTN Harmony Environment Program is the umbrella of CSR implementation program in the Company. The Company integrates the interests to improve the quality of life of the community with the Company’s business interests in a synergistic form. The objective is so that the Company and the community will benefit from the long-term programs.

CSR VISION“To care for the interests of society and the environment by contributing to sustainable economic development and community empowerment, especially in the housing/residential areas, which is Bank BTN’s core business”.

CSR MISSION1. To improve the welfare of society and environment.2. To develop the Bank’s values and culture.3. To establish a positive Bank’s image in the public

eye.4. To enhance the cooperation and mutual respect

with the communities and the environment where the Bank Offices operate.


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Company CSR Activities 2017Activity Sector Date Activity Name

Economy June 21 The Company participated in Iftar with 1,000 orphans, an activity initiated by Kamerad

October 11 Distribution of Emergency Disaster Relief for Sinabung Eruption in District of Karo, North Sumatera

December 7 Distribution of Free Essential Food Materials in the District of Sabang, Nanggroe Aceh Darussalam Province

December 12 Provision of supporting facilities and equipment In Hutan Adat Kasepuhan Karang Banten activity

December 29 The Company participated in State-Owned Enterprises for Veterans from Gorontalo program in Halim PK Base Operation with the President of RI

Art and Culture January 23 Distribution of assistance for art and culture supplies and facilities in Woro Village, Rembang, Central Java

August 24 The Company participated in supporting Nangku Arts & Culture activities and the 1439 H / 2017 Panjalu Cultural Festival organized by Borosngora Panjalu Foundation in Ciamis, Central Java

August 25 The Company supported the Ternate Sultanate to participate in the Keraton Nusantara Cultural Festival in Cirebon

October 27 The Company supported the 2nd Pottery Festival in 2017 organized by the Village Government of Karanganyar, District of Magelang, Central Java

Education January 31 Provision of education facilities and infrastructure for SDN 03 Sembalun Elementary School, East Lombok District, West Nusa Tenggara, in the SOE for the Nation program in Mandalika

April 29 Development of education facilities in Hikmatu Syahdina Foundation located at Cipasung Village RT 01/07, Rancatungku, Pameungpeuk Sub-District, Bandung District Provision of education facilities and infrastructure to Cahaya Keluarga Fitrah Foundation for autism therapy for poor families in Tanjung Priok, North Jakarta Bandung

May 4 Provision of education facilities and infrastructure to Cahaya Keluarga Fitrah Foundation for autism therapy for poor families in Tanjung Priok, North Jakarta

May 17 The Company participated in improving education quality at Mambaul Huda Madrasa in Pati

May 19 Construction of new classrooms at Madrasah Alawiyah Al Manar located in Menoro Village, Sedan Sub-District, Rembang, Central Java

May 29 The Company participated in improving quality of education at a number of Madrasas in Central Java (Pati, Jepara, Rembang, Semarang, and Kendal)

July 14 Improving education facilities and infrastructure at Baidhaul Ahkam, located at I. Villa Tangerang Indah Sangiang Regency, Rt. 004/012, Gebang Raya Village, Periuk Sub-District, Tangerang Municipality, in Banten.

July 31 UIN Sunan Gunung Jati Bandung Provision of 2 units of computers for education facilities at UIN Sunan Gunung Jati, Bandung

August 7 Provision of supporting facilities and infrastructure to support the 2017 Siswa Mengenal Nusantara Program in the Province of Gorontalo

September 8 Assistance in procurement of supporting facilities and infrastructure in Nurul Hikmah Madrasa and Orphanage Foundation, Langka Mataram Village

December 28 Provision of art supplies in supporting education infrastructure facilities in Az Zahra Sekura Foundation, located in JL. Raya Jepara Bangsri, Central Java

Facilities and Infrastructure February 8 Renovation of Vertical Housing building in Southern Cibinang BesarApril 12 Construction of facilities and infrastructure for KB Dahlia, located in Krajan, Kedawung

Village, Nguling Sub-District, Pasuruan District, East Java, as well as renovation of sports facilities located in Watulumbung Village, Lumbang Sub-District, Pasuruan

April 18 Site visit for BUMN Hadir Untuk Negeri in Gorontalo for SMN and Veteran Home Renovation

April 29 Provision of sanitation facilities around the Yogya Kembali Monument Museum

May 4 Provision of supporting facilities and infrastructure (MMT and enforcement framework) for Klewer Solo Market

May 5 Road renovations in Pasarenan Village, Kedungdung Sub-District, Sampang, East Java Kedungdung, Sampang Regency, East Java

December 21 Renovations of facilities and infrastructure in Kejambon Market, in the form of provision of 20 units of waste bins located in Jl. Sultan Agung, Tegal Municipality, Central Java.



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Activity Sector Date Activity NameReligious Affairs February 24 Renovation of Nurul Muttaqin Mosque in Sanggen, Gandurejo Village, Bulu Sub-District,

in Temanggung, Central JavaMarch 24 Renovation of Attaqwa Mosque Minaret, located in Jl. Kresek Raya, Duri Kosambi,

Cengkareng, West JakartaMarch 24 Construction of Baitul Maqdis Al Rahmah Mosque, located in Jl. Muhammad Ali, Central

JakartaMarch 29 Provision of education facilities and infrastructure to Cintya Nandika Batam Foundation

and Nurul Haq Foundation, Batam MunicipalityMarch 30 Construction of Al Gufron Mosque, located in Jl. Cendrawasih, Maledeang, Manado

MunicipalityMarch 31 Construction of Gereja Kerapatan, located in Buku Utara Village, Belang Sub-District,

Southeast Minahasa DistrictMarch 31 Building Rehabilitation at Miftahul Ulum Madrasa, located in Sumber Penjalin, Akkor

Village, Palengaan Sub-District, Pamekasan District, East Java March 31 Construction of entrance gate in Banyuanyar, Banjarsari Sub-District, Surakarta

MunicipalityApril 12 Rehabilitation of Nurul Hidayah Prayer Room, located in Dusun Gunungan RT 03/14,

Nguling Village, Nguling Sub-District, Pasuruan District, as well as provision of facilities and infrastructure for KB Permata Bunda located in Kramat, Watestani Village, Nguling Sub-District, Pasuruan, East Java

April 12 Construction of Al Mubarok Mosque, located at Gesing Village, Rowogempol, Lekok Sub-District, Pasuruan District, and Bank BTN’s participation in Baitul Hasani Mosque, located at Dsn Welulang Lor, Wlulang Village, Lumbang Sub-District, Pasuruan District

May 5 Renovation of Al Kautsar Prayer Room located in Trasang, Ambat Village, Tlanakan, Pamekasan, East Java

May 10 Construction of prayer rooms and paving of Nur Al Falah Mosque, located at Bukit Dago Housing Complex, South Tangerang District, Banten

May 12 Construction of Sion Mapura Tanah Papua Church buildingMay 16 Renovation of Miftakhul Jannah Mosque, located in Nguncup, Bekiring Village, Pulung

Sub-District, Ponorogo, East JavaMay 23 Construction of facilities at Musholla Al Hasyimiyyah, located in Cabean Village Kidul,

Bulu Sub-District, Rembang District, Central JavaJune 14 Construction of GKPI, GKPA Selantom Tonga, construction of pastoral housing,

Construction of BKPN Church, and construction of Babur Ikhsan MosqueSeptember 15 Construction of Al Kautsar Mosque located at Villa Nusa Indah 2, Bojongkulur, Gunung

Putri Sub-District, Bogor DistrictDecember 28 Assistance in construction of Al Hikmah Mosque, located at RT 06/06, Sukaluyu,

Sebeunying Kalor Sub-District, Bandung DistrictHealth May 10 The Company participated in providing health infrastructure and facilities for DKM Jami

Al Muhajirin, Pelabuhan Ratu, Bekasi DistrictJuly 31 The Company participated in providing health facilities and infrastructure at Ibnu Sina

Hospital in Gresik, located in Jl. Wahidin Sudirohusodo, GresikDecember 28 The Company participated in providing support for a number of activities in health and

disaster relief organized by the Indonesian Red Cross Organization, Central Jakarta


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PARTNERSHIP AND COMMUNITY DEVELOPMENT PROGRAM IMPLEMENTATION [GRI 413-1]In implementing the Partnership and Community Development Program, the Company refers to Law No.19 of 2003 on State-Owned Enterprises and Minister of SOEs Regulation No. PER-09/MBU/12/2016 dated December 16, 2016, on State-Owned Enterprises Partnership and Community Development Program. PKBL is a Company’s forum to conduct community development and empowerment programs, and improve the quality of life of communities outside CSR program activities. PKBL Program is conducted simultaneously through two main activities, i.e. Partnership Program and Community Development Program. The Partnership Program’s objective is to assist the small-scale business development of the Bank’s partners to become self-supporting, and to contribute to improving the welfare of the communities surrounding the operational area. The Community Development Program is focused on improving the quality of life and empowering the community’s social condition. [GRI 103-2]

The Company has specifically prepared its own report to report on the performance of the PKBL, which is an integral part of the Company’s Annual Report. The PKBL performance report is in accordance with the Minister of SOEs Regulation No. PER-02/MBU/7 2017 dated July 5, 2017, on the Second Amendment to the Ministry of State-Owned Enterprises Regulation No. PER-09/MBU/04/2015 on the Partnership and Community Development Program of the State-Owned Enterprises. [GRI 103-2]

PARTNERSHIP PROGRAM [GRI 413-1]The Company’s partnership program is targeted at partners who have small-scale businesses for investment and/or working capital that are productive. Throughout 2017, the Company has provided Rp6,201 million billion loan assistance for the partnership program, which was distributed to 169 partners. The disbursement of Company’s Partnership Program is categorized based on area and sector. In 2017 period, the Company disbursed the partnership program funds in East Java, West Java, Gorontalo, DKI Jakarta, Southeast Sulawesi, East Nusa Tenggara, Central Java,

CSR Fund Disbursement Realization in 2017

Activity Sector Disbursement Realization (Rp Million)

Economy 451

Art and Culture 115

Sports -

Education 228

Health 20

Facilities and Infrastructure 4,214

Religious Affairs 120

Nature Preservation -

Total 5,148



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South Sulawesi, West Nusa Tenggara, West Sumatra, and D.I. Yogyakarta. The funds are distributed through several sectors, i.e. fishery, plantation, agriculture, animal husbandry, industry, services, and trading. The realization of Partnership Program fund disbursement in 2017 is reflected in the following graph:

Number of Established Partners and Realized Funds Disbursed

Number of Partners

PK Fund Disbursement Realization by Area (%)

PK Fund Disbursement Realization (Rp Million)

PK Fund Disbursement Realization by Sector (%)

The performance of the partnership program is assessed based on two indicators, i.e. the effectiveness of fund disbursement and the collectibility of the partnership program refund. In 2017, the effectiveness of fund disbursement reached 11.17%, up from 3.19% in the previous year. The collectibility rate is 75.60%, decreased from the previous year, which was 92.55%.

By 2017, in addition to the exceeded target of rate of return, the distribution target for newly established partners around the Company’s operational area is exceeding the target too, at 13.94% of total PK funding. The target is 80% of Prioritized PK funds to the surrounding communities in the operational area. This is adapted to the economic empowerment program of local communities in order to improve the business independence of the community.

43

2016

169

2017

1,780

2016

6,201

2017

4% Perikanan

6% Peternakan

4% Perkebunan

32% Industri

26% Pertanian

10% Usaha Perdagangan

10%UsahaJasa20172017

34%EastJava

23%CentralJava

5%WestJava

1%DKIJakarta

6% NTT

9% Southeast Sulawesi

12% South Sulawesi

1% NTB

4%WestSumatra

4% D.I Yogyakarta

1% Gorontalo


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If in the implementation, the partners are having difficulties in repaying the loan, the loan will be recovered by rescheduling and reconditioning. In 2017, there is no rescheduling or reconditioning to the partners.

SUCCESS STORY [GRI 103-3]Featured Partnership Program [GRI 413-1]

Partner’s Profileproduct Krawang Cloths, Bags, and Jilbab

Total Loans 22,500,000

Year Lent 2017

Total Employees 3

Success Story of partner from Gorontalo Branch OfficeThe lack of sales of Gorontalo unique goods motivated me to start the business of Krawang Clots, Jilbab, and Bags. I started the business from the ground, and now, with the Partnership Program from Bank BTN, they can provide the capital loans. Thus, I can attend various events outside the city to sell my unique Gorontalo goods.



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127126

Partner’s Profileproduct pottery Artisan

Total Loans 10,000,000

Year Lent 2017

Total Employees 4

Success Story of partner from Magelang Branch OfficeAt first, the partner has a small-scale business of Household Pottery, such as pot, mortar, and cauldron (in Javanese: kuali, kendi, anglo, etc.). The merchant sales are limited in traditional markets in Borobudur. As time goes by, the home industry is developing into the manufacturer of unique and interesting souvenirs, such as table decoration, ashtray in the form of Temple, flower vase, teapot, and souvenirs for weddings etc. Some foreign tourists went in a tour. One of the agenda by Biro Travel dan Tour, is the practice to make souvenir at Mr. Supoyo’s house. Students from various ages (Playgroup, Elementary, Junior High, High School) went to conduct their extracurricular activities by practicing pottery art at Mr. Supoyo’s house. Currently, the pottery production is growing, because there are new creations and ideas.


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COMMUNITY DEVELOPMENT PROGRAM [GRI 413-1]The Company’s Community Development Program (BL) is a community empowerment program that has the main objective to help improve the welfare of the community, especially the communities surrounding the Company’s operational areas. In 2017, a total of Rp20,023 billion of Community Development Program assistance funds were

Realization of Fund Disbursement of Community Development Program by Activities 2017

No Activity Sector Disbursement (Rp)

1 Natural Disaster 3442 Education and/or Training 3,8693 Health Quality Improvement 4814 Public Infrastructure & Facilities 4,1365 Religion & Worship 1,7646 Nature Preservation 3997 Community & Social Assistance for Poverty Alleviation, including for :

• Electrification in areas without electricity coverage• Clean water facilities• Sanitation, toilet, and washing facilities• Educational assistance, training, apprenticeships, promotions, and other

forms of assistance related to empowering small businesses outside of the Partnership Program beneficiaries

• Home repair and renovations for underprivileged households• Nursery assistance for agriculture, animal farming, and fishery• Business equipment assistance

9,036

Total 20,029

distributed to local communities in 34 Provinces across the Company’s 5 (five) Regional Divisions. The Community Development Funds are channeled through various assistance activities, including education and training, public infrastructure and facilities, religious and worship facilities, and community health and social development for poverty alleviation. The following is the realization of fund disbursement for Community Development Program 2017.

Realization of Fund Disbursement of Community Development Program 2017Office Working Area Amount of Disbursement (Rp)

Regional Office I West Java Branch Office 3,681

Regional Office II DKI Jakarta & Banten Branch Office 3,395

Regional Office III Central Java Branch Offices East Java. Bali & Nusa Tenggara

9,051

Regional Office IV Sumatera Branch Offices 1,742

Regional Office V Sulawesi Branch Offices Kalimantan. Maluku. North Maluku and Papua

2,161

Total 20,029



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PUBLIC FACILITIES AND INFRASTRUCTURE [GRI 413-1]As a form of social and environmental responsibility, the Company carried out the repair of supporting facilities and infrastructures in Pasar Johar Semarang in the form of repair of pavement and street market.

Before Repair After Repair


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SOCIAL COMMUNITY [GRI 413-1]In collaboration with Purna Pasir Kurnia Remaja Nasional in the program of Bakti Anak untuk Negeri, Bank BTN participated in the Unfit House Habitation program, located in Wini Village, Timor Tengah Utara Regency, which is one of the outermost and underdeveloped villages located in East Nusa Tenggara Province.

Before Repair After Repair



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NATURAL DISASTER [GRI 413-1]In extending a helpful hand to some of the disaster-stricken areas in Indonesia, the Company contributed to participating in disaster emergency response by providing necessary aid in alleviating the burden of the impacted communities. In 2017, the Company participated in emergency response activities in several provinces, including Flash Floods in Aceh Tenggara, Floods in Cirebon Regency, Landslide and Flash Floods in Magelang, Flash Floods in Solok, Mount Sinabung in North Sumatera, Mount Agung in Bali, Flood in Padang Sidempuan, and Landslide in Ponorogo.


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EDUCATION AND/OR TRAINING [GRI 413-1]Bank BTN provides Welder Vocational Program for the best sons and daughters of Papua and West Papua Province through Synergy with PT PAL Indonesia to increase motivation and to improve capability and ability to produce superior human resources for a better future.

In addition to these activities, Bank BTN also helps to provide educational books to support educational facilities and infrastructure for schools in need that escaped the attention of local government. In 2017, Bank BTN assisted in the provision of Taman Bacaan Sekolah (School Library or TBS) in Labuan Bajo, West Manggarai Regency, Bengkulu City, and Parapat of Simalungun Regency.



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BUMN HADIR UNTUK NEGERI 2017 (SOES FOR THE STATE) [GRI 413-1]As one of the State-Owned Enterprises (SOEs), the Company participates in contributing to commemorate the 72nd Anniversary of the Republic of Indonesia. The contribution is a concrete step of the Ministry of SOEs and SOEs as Development Agents to participate in National Capacity

Building, in which the Company plays a role in improving the nation’s welfare through real work that has a direct impact on the community.

The BUMN Hadir untuk Negeri program, which has been implemented by the Company in North Maluku Province is as follows::

EDUCATION AND/OR TRAINING

Siswa Mengenal NusantaraGiving opportunities to 20 students of 11th Grade (2 of them are students with disabilities) who excel and come from poor families to recognize the cultural diversity and natural wealth of other provinces. The activities cover 3 aspects of insight that includes socio-cultural insight, educational insight, and entrepreneurship insight.

The Company, as the Coordinator for North Maluku Province, sent the said students to West Kalimantan Province for one week.


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FUNDS REALIZATION FOR COMMUNITY PROGRAMS

In 2017, the Company has realized funds for CSR programs amounting to Rp5.14 billion or 102.96% of the total CSR funds of the Company, which has been distributed to various fields of activities including; economy, education, health, facilities and infrastructure, cultural arts and religious activities. The Company’s CSR Budget is set in the Company’s work budget and plans by taking into account the compliance and fairness aspects. The following is the realization of the Company’s CSR program funds until 2017:

Realization of CSR Program Fund (Rp Million)

4,371

2016

5,148

2017

Realization of PKBL Program Fund (Rp Million)

14,933

2016

26,144

2017

Referring to the Minister of SOEs Regulation No. PER/03/MBU/12/2016 dated December 16, 2016, on the Partnership and Community Development Program of State-Owned Enterprises, there is some amendment related to the PKBL implementation, one of which concerns the source of funds. In accordance with Article 8 of the aforementioned Minister of SOEs Regulation, the PKBL source fund must come from net profit after tax, which shall be stipulated in the GMS and/or the Minister on the Ratification of the SOEs Annual Report Guidance, which is a maximum of 4% of the net profit after tax of the previous fiscal year. However, based on the Press Release of Indonesian Institute of Accountants, on the Decision on Plenary Meeting dated February 23, 2016, DSAK IAI voiced their opinion on the new Minister Regulation. The PKBL Fund Disbursement by SOEs is still recognized as an expense in profit or loss because the distribution of PKBL is not an equity transaction between SOEs and the Ministry of SOEs as shareholders. Therefore, the PKBL Fund Disbursement cannot be categorized as a deduction for the balance and cannot be presented directly in the statement of changes in equity. In 2017, the Company realized a total of Rp26.23 billion for the PKBL program. [GRI 103-2]



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PT. Moores Rowland Indonesia Jl. Sisingamangaraja No. 26 – Jakarta Selatan 12120 - Indonesia

Tel: +62 21 720 2605 - Fax: +62 21 720 2606 - www.moores-rowland.com

Independent Assurance Statement Report No. 0218/BD/0004/JK

To the management of PT Bank Tabungan Negara (Persero) Tbk We were engaged by PT Bank Tabungan Negara (Persero) Tbk (‘BTN’) to provide assurance in respect to its Sustainability Report 2017 (‘the Report’). The assurance has been carried out by a multi-disciplined assurance team with a broad range of skills and depth of experience, thus providing a high level of competency for the assurance engagement. Independence We were not involved in the preparation of any key part of the Report and carried out all assurance undertakings with independence and autonomy. We did not provide any services to BTN during 2017 that could conflict with the independence of assurance engagement. Assurance Standards We conducted our work in accordance with ISAE3000 ‘Assurance Engagements other than Audits or Reviews of Historical Financial Information’ issued by the International Auditing and Accounting Standards Board. In addition, we have also planned and carried out our work in accordance with AA1000AS (2008) ‘AA1000 Assurance Standards (2008)’, issued by AccountAbility. Level of assurance and criteria used Our evidence-gathering procedures have been designed to obtain a limited level of assurance based on SAE3000 and a moderate level of assurance engagement as set out in AA1000AS (2008) in order to provide confidence to readers by reducing risks or errors to a very low but not to zero. Moreover, the AA1000 AccountAbility Principles Standard (2008) of Inclusivity, Materiality and Responsiveness has also been used as criteria to evaluate the Report.

Scope of Assurance We provided Type 2 assurance engagement under AA1000AS (2008). This involved: 1) an assessment of BTN’s adherence to the AA1000

AccountAbility Principles Standard (2008) and 2) an assessment on the accuracy and quality of

specified sustainability performance information contained within the Report, in relation to the agreed scope. The scope of work consisted of: Partnership program Community stewardship program Product responsibilities Human resources development.

Responsibility

BTN is responsible for all information and claims contained in the Report, including established sustainability management targets, performance management, data collection and report preparation, etc. Our responsibility in performing this engagement is to the management of BTN only for the purposes of verifying its statements relating to its sustainability performance, more particularly as described in the agreed scope. Our responsibility is to express our conclusions in relation to the agreed scope. Methodology

We have assessed several assertions and specified data sets included in the report and the systems and processes used to manage and report these using the following methods: Reviewed report, internal policies, documentation,

management and information systems Carried out interviews with staff involved in

sustainability-related management and reporting Followed data trails to initial aggregated source

and checked sample data to a greater depth during the engagement process.



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PT. Moores Rowland Indonesia Jl. Sisingamangaraja No. 26 – Jakarta Selatan 12120 - Indonesia

Tel: +62 21 720 2605 - Fax: +62 21 720 2606 - www.moores-rowland.com

Limitations Our scope of work was limited to a review of the accuracy and reliability of specified data and interviews with data providers, persons in charge of data collection and processing, as well as persons in charge of sustainability performance-related information. Conclusions We have confirmed that the Report has been prepared in accordance with GRI Standards Core Criteria issued by the Global Reporting Initiative (GRI). Findings and conclusions concerning adherence to the AA1000 AccountAbility Principles of Inclusivity, Materiality and Responsiveness include: Inclusivity

An assessment has been made to determine whether BTN has included all key stakeholders in developing and achieving an accountable and strategic response to sustainability issues. We found BTN demonstrates a strong commitment to stakeholder inclusivity. BTN has an effective system in place for key stakeholders to participate in the development of the organization's response in the context of sustainability. This is demonstrated for instance, by conducting needs assessment surveys and materiality level survey to the key stakeholders group. However, we recommend that BTN continues to improve stakeholder inclusivity systems and procedures on a regular basis to maintain their effectiveness.

Materiality An assessment has been made as to whether BTN has included in the Report the material information required by its stakeholders in order to enable them to make informed judgements, decisions and actions. We found BTN has a strong process in place to determine material issues. Key material issues were adequately reported and were found to provide balanced information about BTN's sustainability performance. However, we recommend that BTN continues to conduct materiality test on a regular basis in future reports.

Responsiveness

An assessment has been made as to whether BTN demonstrates that it responds to its stakeholders and is accountable to them. BTN was found to be responsive to key stakeholder concerns and expectations. This was achieved through the organization's allocation of resources to stakeholder engagement, the timeliness and accessibility of reported information, and the types of communication mechanisms regularly employed. However, we recommend that continues to improve stakeholder engagement procedures on a regular basis in future reports.

Based on our limited assurance engagement, nothing has come to our attention that causes us to believe that the data of the Report has been materially misstated. Jakarta, February 28, 2018

James Kallman Chief Executive Officer Moores Rowland is an international organization specializing in audit, accounting, tax, legal and advisory services. Moores Rowland is a member of Praxity AISBL, the world's largest Alliance of independent and unaffiliated audit and consultancy companies. We can rely on the skills of more than 33,400 professionals operating together in 97 countries, sharing the same values and sense of responsibility, whilst in Indonesia is served by Moores Rowland, one of the leading sustainability assurance providers.


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14 GRI STANDARDS DISCLOSURE CROSS REFERENCE, FINANCIAL SERVICES SECTOR SUPPLEMENT [GRI 102-55]

GRI StandardDislosure

pageDislosure Title

GRI 101: Foundation 2017

General Disclosure

General Disclosure 2017

Organizational profile

GRI 102-1 Name of the organization 24

GRI 102-2 Activities, brands, products, and services 38

GRI 102-3 Location of headquarters 44, 145

GRI 102-4 Location of operations 44

GRI 102-5 Ownership and legal form 42

GRI 102-6 Markets served 44

GRI 102-7 Scale of the organization 46

GRI 102-8 Information on employees and other workers 79

GRI 102-9 Supply chain 46

GRI 102-10 Significant changes to the organization and its supply chain 25

GRI 102-11 Precautionary Principle or approach 92

GRI 102-12 External initiatives 25

GRI 102-13 Membership of associations 47

Strategy

GRI 102-14 Statement from senior decision-maker 11

Ethics and Integrity

GRI 102-16 Values, principles, standards, and norms of behavior 36, 56

Governance

GRI 102-18 Governance structure 40, 50

Stakeholder Engagement

GRI 102-40 List of stakeholder groups 60, 61

GRI 102-41 Collective bargaining agreements 86

GRI 102-42 Identifying and selecting stakeholders 60

GRI 102-43 Approach to stakeholder engagement 60, 61, 101

GRI 102-44 Key topics and concerns raised 60, 61


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pageDislosure Title

Reporting practice

GRI 102-45 Entities included in the consolidated financial statements 17

GRI 102-46 Defining report content and topic Boundaries 17

GRI 102-47 List of material topics 18, 19

GRI 102-48 Restatements of information 17

GRI 102-49 Changes in reporting 17

GRI 102-50 Reporting period 17

GRI 102-51 Date of most recent report 17

GRI 102-52 Reporting cycle 17

GRI 102-53 Contact point for questions regarding the report 20, 145

GRI 102-54 Claims of reporting in accordance with the GRI Standards 17

GRI 102-55 GRI content index 17

GRI 102-56 External assurance 20

Material TopicTopic Specific Standards

Economic

GRI 103:Management Approach 2017

Economic performance

GRI 103-1 Explanation of the material topic and its Boundaries 18

GRI 103-2 The management approach and its components 63, 89

GRI 103-3 Evaluation of the management approach 64, 89, 93

GRI 201:Economic Performance

GRI 201-1 Direct economic value generated and distributed 63, 64

GRI 201-3 Defined benefit plan obligations and other retirement plans 89

GRI 201-4 Financial assistance received from government 63


Market presence


GRI 103-2 The management approach and its components 87

GRI 103-3 Evaluation of the management approach 89, 93

GRI 202:Market Presence

GRI 202-1 Ratios of standard entry level wage by gender compared to local minimum wage 88


Indirect Economic Impacts



GRI 103-3 Evaluation of the management approach 64

GRI 203:Indirect Economic Impacts

GRI 203-1 Infrastructure investments and services supported 64, 65

GRI 203-2 Significant indirect economic impacts 64, 65


procurement practices






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pageDislosure Title

GRI 204:Procurement Practices

GRI 204-1 Proportion of spending on local suppliers 66


Anti-corruption




GRI 205:Anti-corruption

GRI 205-2 Communication and training about anti-corruption policies and procedures 57

Environment


Materials


GRI 103-2 The management approach and its components 70, 72, 74


GRI 301:Materials

GRI 301-1 Materials used by weight or volume 72


Energy




GRI 302:Energy

GRI 302-1 Energy consumption within the organization 70

GRI 302-4 Reduction of energy consumption 71


Water




GRI 303:Water

GRI 303-1 Water withdrawal by source 71


Effluents and Waste




GRI 306:Effluents and Waste

GRI 306-2 Waste by type and disposal method 72


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pageDislosure Title


Environmental Compliance




GRI 307:Environmental Compliance

GRI 307-1 Non-compliance with environmental laws and regulations

Social


Employment




GRI 401:Employment

GRI 401-1 New employee hires and employee turnover 93

GRI 401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees 93

GRI 401-3 Parental leave


Occupational health and Safety




GRI 403:Occupational Health and Safety

GRI 403-2 Types of injury and rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities 84

GRI 403-3 Workers with high incidence or high risk of diseases related to their occupation 86, 87


Training and Education




GRI 404:Training and Education

GRI 404-1 Average hours of training per year per employee 84

GRI 404-3 Percentage of employees receiving regular performance and career development reviews 86, 87


Diversity and Equal Opportunity




GRI 405:Diversity and Equal Opportunity

GRI 405-1 Diversity of governance bodies and employees 80, 82

GRI 405-2 Ratio of basic salary and remuneration of women to men 87



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pageDislosure Title


Non-discrimination




GRI 406:Non-discrimination

GRI 406-1 Incidents of discrimination and corrective actions taken 85


Freedom of Association and Collective Bargaining




GRI 407:Freedom of Association and Collective Bargaining

GRI 407-1 Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk 85


Child Labor




GRI 408:Child Labor

GRI 408-1 Operations and suppliers at significant risk for incidents of child labor 83


Forced or Compulsory Labor




GRI 409:Forced or Compulsory Labor

GRI 409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor 86


Local Communities


GRI 103-2 The management approach and its components 121, 124, 134


GRI 413:Local Communities

GRI 413-1 Operations with local community engagement, impact assessments, and development programs

121, 124, 126, 128, 129, 130, 131, 132, 133


Marketing and Labeling




GRI 417:Marketing and Labeling

GRI 417-3 Incidents of non-compliance concerning marketing communications99


Customer privacy




GRI 418:Customer Privacy

GRI 418-1 Substantiated complaints concerning breaches of customer privacy and losses of customer data 98


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pageDislosure Title


Socioeconomic Compliance




GRI 419:Socioeconomic Compliance

GRI 419-1 Non-compliance with laws and regulations in the social and economic area101

Financial Services Sector Disclosure

Product Portfolio FS2 Procedures for assessing and screening environmental and social risks 69

FS3 Processes involved in monitoring vendor against environmental and social requirements 70

FS6 Percentage of product portfolio per business line per region and its size 106, 107, 108

FS7 Monetary value of products and services with social impacts 95, 103, 104, 106, 107, 108

Local Communities FS13 Financial access in sparsely populated & economically disadvantaged regions 109, 110

Product and Service Labeling

FS16 Initiatives to enhance financial literacy by type of beneficiary 103, 104, 113, 115



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145144

FEEDBACK FORM FOR STAKEHOLDER

Thank you for your willingness to read PT Bank Tabungan Negara (Persero) Tbk. 2017 Sustainability Report. To improve the quality of this Sustainability Report and develop the transparency of Company’s sustainable performance to improve the Sustainability Report 2018, we expect your inputs and feedbacks:

No Question Yes No

1 This Sustainability Report has provided useful information on the economic, social, and environmental performance of the Company

2 The contents of the report are presented in a well-structured manner

3 The data and information disclosed are easy to understand

4 The data and information have been disclosed in a full, transparent and balanced manner

5 The data and information provided are useful for decision making

6 The Sustainability Report provides comprehensive information about the profile of the Company and its operations

7 The layout, font, size, color layout, appearance and the pictures contained in the Sustainability Report make it interesting and easy to read

No Question Answer

1 Identify the information in this report that has been the most beneficial to you in terms of:


Company’s Support in Environmental Conservation



Program Strengthening of Inclusion Banking and Financial Literacy

Support for Enhancing The Community’s Quality of Life

2 Describe the undisclosed information in this report that should be included, in the following aspects:


Company’s Support in Environmental Conservation



Program Strengthening of Inclusion Banking and Financial Literacy

Support for Enhancing The Community’s Quality of Life


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145


READER’S PROFILE

• Memberofwhichstakeholdergroup :

• Gender :

• Age :

• EducationalAttainment :

• Occupation :

• NameofInstitution :

• LineofBusiness :

The Company would appreciate any suggestions and feedback that you might have on the information presented in the report. To convey your feedback to the Company, please send this form to: [GRI 102-53]

HEAD OFFICE [GRI 102-3]

PT Bank Tabungan Negara (Persero) TbkMenara Bank BTNJl. Gajah Mada No. 1 Jakarta 10130Telepon: 62-21 6336789, 6332666Fax. 62-21 6346704E-mail: [email protected] Center: 1500 286

This Feedback Form is distributed to the stakeholders as a means of improving the quality of the report and the transparency of the Company’s sustainability performance, as well as providing input for the preparation of the Sustainability Report 2018.