Bank Bali provides bonus, rules out final dividend<\/p>\n
JAKARTA (JP): Publicly listed Bank Bali has decided not to pay
\na final dividend for 1997 but will give shareholders bonus shares
\nin addition to an interim dividend of Rp 45 per share.<\/p>\n
The bank's president, Rudy Ramli, said in a statement
\nfollowing a shareholders meeting over the weekend that the
\nissuance of the bonus shares is expected to strengthen the bank's
\ncapital structure and boost the shares market liquidity in the
\nstock exchange.<\/p>\n
The statement did not say how many bonus shares would be
\nissued for each unit share but did say that investors would not
\nhave to inject additional cash for the bonus.<\/p>\n
The shareholders agreed to the management proposal for not
\nproviding a final dividend for the calender year 1997 because
\nmost of the earnings would be allocated for loan loss provisions
\nin anticipation of a deterioration in the quality of productive
\nassets this year, while the remainder would be used to strengthen
\nits working capital amid the country's economic crisis.<\/p>\n
The bank decided in December to give an interim dividend of Rp
\n45 per share, for which payment had started in February.<\/p>\n
The bank has set aside Rp 236.9 billion from the 1997 net
\nprofit for the loan loss provision, which is an increase of about
\n530 percent from 1996.<\/p>\n
The bank's consolidated profit before loan-loss reserves
\nreached Rp 343.60 billion in 1997, up 58.4 percent from 1996.<\/p>\n
The huge amount for the provision for the loan loss, however,
\nresulted in a year-on-year drop in consolidated net profit by 47
\npercent to Rp 70 billion in 1997.<\/p>\n
The bank said that by the end of last year, it had booked an
\ninterest income of Rp 472.69 billion, up 42.3 percent compared to
\n1996, resulting from the interest of interbank transactions.<\/p>\n
A tight liquidity environment and declining confidence in the
\ndomestic banking sector have forced many banks to secure their
\nbalance sheet by going into the interbank money market.<\/p>\n
The bank also said that it enjoyed a lucrative profit from its
\nover the counter foreign exchange transaction, which resulted in
\na 799 percent jump in forex income to Rp 73.98 billion.<\/p>\n
Economic uncertainty has spurred public demand to buy foreign
\ncurrencies for a variety of reasons, including for protection
\nagainst an expected hyperinflation and other potential losses.<\/p>\n
In mid-March 1998, the U.S. investment bank Merrill Lynch said
\nthat Bank Bali would be one among the very few Indonesian private
\nbanks to survive the current crisis, pointing out the bank's
\nstrong liquidity, cash flow and capital.<\/p>\n
Bank Bali said its capital adequacy ratio last year was 10.78
\npercent, which was well above the previous minimum 8 percent
\nratio requirement.<\/p>\n
Last week, the country's financial authority slashed the
\nminimum ratio requirement for end-1998 to 4 percent due to
\ndifficulties to fulfill the 8 percent level because banks' risk-
\nweighted assets had further deteriorated and the need to provide
\nhuge capital to cover the expected sharp increase in
\nnonperforming loans amid economic hardships.<\/p>\n
Bank Bali did not disclose its current ratio level, but
\nMerrill Lynch said recapitalization would remain a necessity and
\nthat the bank should be able to accommodate the challenges. (rei)<\/p>",
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