BNI increases loan loss provision<\/p>\n
JAKARTA (JP): Bank Negara Indonesia's loan loss provision rose
\nby 77.16 percent as of September this year to Rp 755.58 billion
\n(about US$222.22 million) from Rp 424.49 billion in the same
\nmonth last year.<\/p>\n
BNI president Widigdo Sukarman said yesterday that the rise in
\nthe loan loss provision was necessary to reduce risk from
\nnonperforming loans.<\/p>\n
He estimated that nonperforming loans in the country's banking
\nindustry would surge in the coming years as many corporate
\nborrowers would face difficulty in paying their debts.<\/p>\n
The currency crisis and the government's tight monetary
\npolicy, which has caused a sharp increase in bank rates, would
\ncertainly result in higher loan default rates, he said.<\/p>\n
\"We need to add the loan loss reserves as part of the bank's
\nprudential measures,\" he said.<\/p>\n
Unlike other banks, publicly listed BNI was not severely
\naffected by the monetary turmoil, which had caused a 35 percent
\ndecline in the rupiah against the U.S. dollar.<\/p>\n
\"BNI can survive the situation and even record an increase in
\nnet profit and operating income in the third quarter,\" he said.<\/p>\n
He said that BNI managed to book an 18.83 percent increase in
\nnet profit to Rp 283.77 billion in the January to September
\nperiod this year from Rp 238.79 in the corresponding period last
\nyear.<\/p>\n
Widigdo attributed the small increase in net profit due to the
\nrise of the bank's loan loss provision.<\/p>\n
The bank's total operating income rose to Rp 583.78 billion in
\nthe first to third quarters of this year from Rp 354.11 billion
\nin the same period last year, he said.<\/p>\n
BNI, the only state-owned bank listed in local stock
\nexchanges, booked a net interest income of Rp 903.21 billion in
\nthe first nine months of this year, up 32 percent from Rp 684.18
\nbillion during the corresponding period last year.<\/p>\n
Widigdo said that the bank's total assets rose by 34.7 percent
\nto Rp 44.42 trillion as of September, compared to Rp 32.98
\ntrillion in the same month last year.<\/p>\n
He said that in the same period, BNI's total credits rose to
\nRp 30.14 trillion from Rp 20.90 trillion while public funds
\nincreased to Rp 21.19 trillion from Rp 18.11 trillion.<\/p>\n
Widigdo declined to mention the bank's net profit target and
\nrevenue this year.<\/p>\n
\"I cannot tell you about our target this year,\" he said.<\/p>\n
A global securities firm ING Barings Securities recently
\nlowered its profit target for BNI for 1997 and 1998 in the wake
\nof the currency crisis.<\/p>\n
Revision<\/p>\n
Barings said that BNI's profit estimate for 1997 was revised
\ndown to Rp 384 billion from Rp 469 billion while for 1998 it was
\nlowered to Rp 423 billion from Rp 548 billion.<\/p>\n
Barings attributed its revision to shrinking margins this year
\nand slower than anticipated loan growth.<\/p>\n
The securities firm said that the recent currency turmoil and
\nthe real possibility of much lower loan growth and higher
\nprevailing interest rates for the rest of this year and most of
\n1998 would certainly affect the bank's financial performance.<\/p>\n
Barings said it did not include the foreign exchange loss
\nincurred by BNI during the recent currency turmoil because BNI
\nhelped the central bank to intervene in the foreign exchange
\nmarkets recently to prevent a further attack on the rupiah by
\nspeculators.<\/p>\n
\"This can result in significant foreign exchange loss in the
\nbank,\" Barings said.<\/p>\n
Widigdo, however, declined to comment on the bank's
\nintervention in the foreign exchange market and total amount of
\nfunds for the intervention.<\/p>\n
\"Do not ask me about that. Ask the central bank for that,\" he
\nsaid.<\/p>\n
BNI's director IG Antika said: \"Even if we intervened, we are
\njust lending a hand to the central bank and the amount of the
\nintervention has been very limited.\" (aly)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bni-increases-loan-loss-provision-1447893297",
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