Bank Bali expects to be back in the black in 2001

JAKARTA (JP): After being in the red for the past three years, publicly listed Bank Bali expects to be back in the black this year thanks to a recovery in its lending operations.

The bank's president, Dradjat B. Prasetyo, said the increase in interest income would enable the bank to make a profit again.

This year, the bank is projected to book a pretax profit of about Rp 712 million as compared to a net loss of Rp 1.08 trillion in 2000.

Dradjat said that the improvement in the bank's performance was also contributed to the government's recapitalization program late last year.

"The completion has been a stepping stone for the bank to improve its performance gradually to reach normal operations," Dradjat announced at a media conference.

The bank, once one of the country's most sound banks, has suffered significant losses since the outbreak of the financial crisis in late 1997.

Dradjat said the bank projected to provide Rp 2.42 trillion in new loans this year, an increase of 85 percent from Rp 1.29 trillion last year.

The new loans, which will be extended for consumer financing and commercial activities, will top the bank's priorities this year, Dradjat said.

"Our main goal this year is to generate profit by targeting potential creditors in the medium to small-scale brackets and by managing carefully our productive assets on the grounds of prudent principles," Dradjat said.

The bank channeled Rp 1.29 trillion in new loans within the first five months of this year, Dradjat said.

He said that the bank's capital adequacy ratio was 11 percent as of May, still higher than the minimum 8 percent required by the central bank by the end of this year.

Aside from placing priority on new lendings, the bank will also reduce the amount of its nonperforming loans through efforts that include debt restructuring.

Dradjat said the bank's nonperforming loans was 36 percent of its lendings as of May, a slight decline from 43.9 percent last year.

The high percentage of nonperforming loans was due mainly to the failure of five of the bank's corporate borrowers to repay their debts on time. He refused to name the companies.

Last year, the bank's third party funds reached a total of Rp 9.6 trillion, an increase of 7.9 percent from Rp 8.98 trillion the previous year.

Dradjat said that a continued increase in the rates of Bank Indonesia promissory notes (SBIs) could jeopardize the banking industry.

He said that the interest increase of one-month SBIs, which has hovered at over 16 percent, should be curbed. Otherwise, many banks would face difficulties in maintaining their operations.(03)