Indonesia Danamon Expects '03 Net To Grow 25%<\/p>\n
Edhi Pranasidhi
\nDow Jones
\nJakarta<\/p>\n
PT Bank Danamon Indonesia expects net profit growth to slow to
\naround 25 percent next year, from 38 percent projected this year,
\ndue to a fall in interest income amid declining interest rates.<\/p>\n
\"We expect our net profit to increase to around Rp 1.25
\ntrillion next year,\" Bank Danamon's finance director Prasetio
\nsaid in an interview Monday.<\/p>\n
Net growth of the bank, Indonesia's fifth largest bank by
\nassets, will mostly come from miscellaneous operating income,
\nincluding fee-based income, commissions and foreign exchange
\ngains, he said.<\/p>\n
This year, Bank Danamon expects to book around Rp 1 trillion
\n(US$112 million) in net profit, up 38 percent from Rp 723 billion
\nlast year.<\/p>\n
The net profit rise this year, which is above a previous
\nestimate of 18 percent, is due to a forecast increase in the
\nbank's loan portfolio to Rp 18 trillion by year-end from an
\nearlier projected Rp 10 trillion.<\/p>\n
Prasetio said interest income next year is likely to remain
\nflat or slightly lower, given expected falling interest rates,
\nbut he wouldn't provide an estimate.<\/p>\n
The government has been guiding rates lower to help boost
\ngrowth, with the benchmark one-month central bank note now at
\n12.99 percent, down from over 16 percent a year ago.<\/p>\n
Bank Danamon booked net interest income of Rp 3.74 trillion in
\nthe nine months ended Sept. 30, down 11 percent on year from
\nRp 3.91 trillion.<\/p>\n
But higher miscellaneous operating income of Rp 456.12
\nbillion, compared with Rp 250.69 billion last year, lifted net
\nprofit for the first nine months of this year to Rp 725.26
\nbillion, a rise of 26 percent from Rp 576.82 billion a year ago.<\/p>\n
In a bid to support net profit growth, the bank expects to
\nincrease its loans-to-deposits ratio next year to around 56
\npercent from a target of 48 percent this year, Prasetio said.<\/p>\n
Bank Danamon expects to extend Rp 28 trillion in loans next
\nyear.<\/p>\n
Established in 1956, Bank Danamon has Rp 48 trillion in assets
\nrepresenting 5 percent of the system. The bank is publicly
\nlisted, but is 99.35 percent owned by the Indonesian government
\nafter a bailout following the 1997 Asian economic crisis.<\/p>\n
The government plans to divest most of its stake in the bank
\nnext year. It plans to sell a 20 percent stake via a public
\noffering and a 51 percent stake to a strategic shareholder, which
\nwill also have management control of the bank.<\/p>\n
In an effort to attract investors to buy the government's
\nstake, Bank Danamon's management and senior government officials
\nwill hold a roadshow early next year in several countries in
\nEurope and Asia, Prasetio said. He didn't elaborate.<\/p>\n
Banking industry sources said the government expects to
\ncomplete the sale of the planned 71 percent stake by March or
\nApril.<\/p>\n
The government had planned to sell the stake in November, but
\nit had to delay the move to early next year as the recent bomb
\nblasts in Bali damped investor sentiment.<\/p>\n
The roadshow is expected to become a vehicle for the
\ngovernment to brief investors on the investment climate in
\nIndonesia after the bombings, said Prasetio.<\/p>\n
To attract investors, Bank Danamon's management also plans to
\nboost the share price by combining five existing shares to one
\nnew share. The 5-for-1 reverse stock split is expected to be held
\nin the first quarter of next year.<\/p>\n
Bank Danamon shares closed 7.7 percent higher Friday, the last
\ntrading of the year, at Rp 350.<\/p>\n
\"I expect that the bank's share price will be at between
\nRp 1,500 and Rp 1,800 after the reverse stock split,\" Prasetio
\nadded.<\/p>",
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