NISP to complete stake sale by June, says top executive<\/p>\n
Aloysius Unditu and Claire Leow, Bloomberg\/Jakarta<\/p>\n
Indonesia's PT Bank NISP may complete the sale of a 28.5 percent
\nstake to Oversea-Chinese Banking Corp. by June, handing majority
\ncontrol to the smallest of Singapore's three lenders, President
\nDirector Pramukti Surjaudaja said on Thursday.<\/p>\n
Oversea-Chinese, known as OCBC, will boost its stake in
\nIndonesia's 11th-largest lender to 51 percent after the purchase.
\nIt paid S$119 million (US$72.4 million) to buy 22.5 percent of
\nBank NISP last year.<\/p>\n
The ownership change may help Bandung-based Bank NISP fend off
\nincreasing competition and expand its business. OCBC gets a
\nchance to tap a market of 235 million people, 10 times more than
\nSingapore and neighboring Malaysia combined.<\/p>\n
\"OCBC will ensure our existence, help us to weather future
\nturbulence,\" said Surjaudaja, 42, whose grandfather founded the
\nlender with a Dutch partner in 1941, four years before Indonesia
\ngained independence from Dutch colonial rule. \"It's good for the
\ncustomer, for employees and investors.\"<\/p>\n
Bank NISP shares more than doubled in 2004, outpacing a 45
\npercent gain in the benchmark Jakarta Composite Index, according
\nto data compiled by Bloomberg.<\/p>\n
The additional stake in NISP was yesterday valued at Rp 907.2
\nbillion (US$97.76 million), or Rp 770 a share, on the Jakarta
\nStock Exchange. NISP may sell the stake for Rp 750 a share, or
\ntwice its book value, said Irvin Patmadiwiria, who helps manage
\n$232 million at PT Batavia Prosperindo Manajemen in Jakarta.<\/p>\n
NISP is facing increasing competition as bigger rivals such as
\nPT Bank Mandiri, Indonesia's largest bank, PT Bank Central Asia
\nand PT Bank Rakyat Indonesia try to tap rising demand for credit
\nin an economy forecast by the government to grow 5.5 percent in
\n2005, the fastest in nine years, from an estimated 5 percent last
\nyear.<\/p>\n
Companies and consumers are borrowing more to invest and spend
\nafter interest rates fell in 2004 to the lowest in six years.
\nConsumer spending makes up about 70 percent of Indonesia's $208
\nbillion economy.<\/p>\n
\"Since many Indonesian banks are boosting loans to consumers
\nand small and medium-sized enterprises, NISP will have to face
\ntough competition,\" said Winston Sual, who helps manage about $1
\nbillion of Indonesian assets at Panin Asset Management in
\nJakarta. That will erode profit margins, Sual said.<\/p>\n
NISP earned Rp 230 billion in unaudited profit in the first 10
\nmonths of 2004, up from Rp 129 billion a year earlier, it said in
\na statement on Dec. 21. Net interest income, or revenue from
\nborrowers after interest was paid to depositors, rose by almost
\nhalf to Rp 522 billion.<\/p>\n
NISP plans to make Rp 3 trillion to Rp 4 trillion of new loans
\nthis year, a third of them to small companies and to consumers
\nbuying cars and homes. In 2004, it made about Rp 2 trillion of
\nnew loans.<\/p>\n
Still, profit growth will probably slow to 30 percent in 2005,
\nfrom an estimated 50 percent in 2004, Surjaudaja said. He's
\nconcerned loans may become less profitable as the difference
\nbetween lending and deposit rates narrows.<\/p>\n
\"Because of the competition, our net interest margin will go
\ndown,\" he said.<\/p>\n
Oversea-Chinese may help the bank compete by introducing a
\nwider range of financial products and risk management skills, he
\nsaid.<\/p>\n
NISP, which has total assets of Rp 15.4 trillion, wants to
\nbecome a lender capable of competing beyond its West Java base.
\nThis would require about Rp 10 trillion of capital, five times
\nits current size, which would take the lender eight to 10 years
\nto achieve on its own, Surjaudaja said.<\/p>\n
\"Having OCBC as the majority owner will help us achieve our
\ngoals faster, with more certainty,\" he said.<\/p>",
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