BNI expects nonperforming loans to expand<\/p>\n
JAKARTA (JP): Publicly listed Bank Negara Indonesia (BNI)
\nplans to boost its loan loss reserves to offset a sharp rise in
\nnonperforming loans due to the economic crisis, a top official
\nhas said.<\/p>\n
\"More earnings need to be retained to increase the loan loss
\nreserves because we anticipate nonperforming loans to rise in
\n1998,\" BNI president Widigdo Sukarman told reporters yesterday
\nfollowing the bank's annual shareholders meeting.<\/p>\n
He declined, however, to disclose the increase, but said that
\nthe economic crisis would force all banks to face the same
\nproblem because the real sector had been badly hit by
\ndifficulties in obtaining imported raw materials and suffered
\nfrom high interest rates.<\/p>\n
BNI reported its outstanding loans totaled Rp 60.28 trillion
\n(US$4.67 billion) as of March, a jump of more than 155 percent
\nagainst the level of the same period last year.<\/p>\n
Widigdo said the sharp rise was due to the plunging value of
\nthe rupiah against the U.S. dollar which caused its foreign
\nexchange lendings to soar in local currency terms.<\/p>\n
He also said the shareholders had agreed to the bank's
\nproposal to provide an annual dividend of only 20 percent of net
\nearnings to increase the loan loss reserves.<\/p>\n
The dividend for 1997 was fixed at Rp 14 per share.<\/p>\n
BNI reported 1997 net earnings declined 5.49 percent to Rp
\n315.24 billion from Rp 335.13 billion in 1996.<\/p>\n
The bank attributed the weaker performance to the country's
\neconomic crisis and the 336.93 percent increase in loan loss
\nprovisions to Rp 689.72 billion during the year from Rp 157.85
\nbillion in 1996.<\/p>\n
The bank's net profit in the first quarter of 1998 totaled Rp
\n36 billion, Widigdo said, but he did not provide comparative
\nfigures.<\/p>\n
Total deposits during the first quarter jumped more than 111
\npercent to Rp 42.41 trillion against the same period in 1997, or
\na 44.73 percent increase compared to the deposit position as of
\nthe end of December.<\/p>\n
The bank attributed the sharp increase to high time-deposit
\ninterest rates.<\/p>\n
BNI also reported that total assets in the first quarter of
\nthis year soared more than 126 percent to Rp 81.24 trillion from
\nthe same period in 1997, or a 42 percent increase from the full
\nyear's level.<\/p>\n
Domestic banks have aggressively pushed up interest rates to
\nretain depositors' money due to rising uncertainty in the
\nindustry following the closing down of 16 banks in November.<\/p>\n
Widigdo, however, stressed that interest rates must gradually
\ncome down but that it would not significantly lessen the
\neffectiveness of the government's macroeconomic policy.<\/p>\n
BNI and other banks have started to lower their interest
\nrates. Interest rates for one-month time deposits have dropped
\nfrom 60 percent last month to 55 percent last week, while
\nsettling at 48 percent yesterday.<\/p>\n
Widigdo said the government's high interest rate policy aiming
\nto contain inflation and stabilize the rupiah was no longer
\neffective.<\/p>\n
Shareholders also agreed yesterday to the management's
\nproposal to revalue the bank's fixed assets that have been owned
\nfor more than five years in an effort to raise its capital
\nadequacy ratio from a current level of 8.31 percent.<\/p>\n
Shareholders also approved a plan to raise the bank's
\nauthorized capital to Rp 8.5 trillion from Rp 5 trillion. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bni-expects-nonperforming-loans-to-expand-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}