BNI's profit plunges 83% on loan scam<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
The audited net profit of state-owned Bank Negara Indonesia
\n(BNI), the country's second largest bank in terms of assets,
\ndropped by 83 percent last year after it was hit by a high-
\nprofile loan scandal.<\/p>\n
BNI president Sigit Pramono said net profit fell to a mere Rp
\n420 billion (US$49.4 million) from Rp 2.51 trillion in 2002, as
\nthe management decided to set aside a huge provision against
\npotential losses from the scandal in mid-2003.<\/p>\n
\"The decline in our net profit is mostly attributable to the
\ngraft case,\" said Sigit at a press briefing on Tuesday.<\/p>\n
He said the bank had set aside Rp 1.3 trillion to cover any
\nlosses. The loan-loss provision makes up 65 percent of the Rp 2
\ntrillion the bank spent to cover other losses last year.<\/p>\n
Sigit also attributed the decline in profit on the bank's move
\nto set aside around Rp 420 billion to cover losses after it
\nunderwent a quasi-reorganization.<\/p>\n
A quasi-reorganization is a financial engineering tool used to
\ncorrect a company's balance sheet by reevaluating its assets
\nbased on current value.<\/p>\n
Sigit said the bank planned to launch an aggressive loan
\nchanneling program as part of its efforts to improve performance.
\nThe bank has targeted a net profit of Rp 3 trillion this year.<\/p>\n
BNI has decided to expand new lending to Rp 16 trillion this
\nyear, or 86 percent higher than in 2002.<\/p>\n
Of the new lending, 43 percent, or Rp 6.9 trillion, would be
\nchanneled to the corporate sector; 37 percent, or Rp 6 trillion,
\nto small- and medium-scale enterprises; and the remaining 20
\npercent, or Rp 3.1 trillion, to the consumer sector.<\/p>\n
As of last year, the bank had channeled in total of Rp 46.4
\ntrillion of loans.<\/p>\n
The bank's loan-to-deposit ratio (LDR) last year reached 44.09
\npercent, a sharp increase from 38.96 percent in the previous
\nyear.<\/p>\n
Third-party funds gathered by the bank last year amounted to
\nRp 105.1 trillion, up from Rp 96.7 trillion in 2002.<\/p>\n
BNI also reported that net interest revenue, interest earned
\nfrom borrowers after deducting interest paid to depositors,
\njumped to Rp 5 trillion last year from Rp 4.12 trillion in 2002
\ndue to an increase in lending.<\/p>\n
The bank's capital adequacy ratio (CAR) also surged to 18.17
\npercent from Rp 15.94 percent, higher than the minimum
\nrequirement of 8 percent set by the central bank.<\/p>\n
The publicly listed bank plans to sell more of its shares to
\nthe public via a secondary public offering scheme, and will
\nconsist of both new shares and existing ones held by the
\ngovernment as the controller of the bank.<\/p>\n
The offering is slated to take place in August or September
\nthis year.<\/p>\n
BNI shares on the Jakarta Stock Exchange ended unchanged at Rp
\n1,150 on Wednesday's trading.<\/p>",
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