Bank Bali provides bonus, rules out final dividend

Bank Bali provides bonus, rules out final dividend

JAKARTA (JP): Publicly listed Bank Bali has decided not to pay
a final dividend for 1997 but will give shareholders bonus shares
in addition to an interim dividend of Rp 45 per share.

The bank's president, Rudy Ramli, said in a statement
following a shareholders meeting over the weekend that the
issuance of the bonus shares is expected to strengthen the bank's
capital structure and boost the shares market liquidity in the
stock exchange.

The statement did not say how many bonus shares would be
issued for each unit share but did say that investors would not
have to inject additional cash for the bonus.

The shareholders agreed to the management proposal for not
providing a final dividend for the calender year 1997 because
most of the earnings would be allocated for loan loss provisions
in anticipation of a deterioration in the quality of productive
assets this year, while the remainder would be used to strengthen
its working capital amid the country's economic crisis.

The bank decided in December to give an interim dividend of Rp
45 per share, for which payment had started in February.

The bank has set aside Rp 236.9 billion from the 1997 net
profit for the loan loss provision, which is an increase of about
530 percent from 1996.

The bank's consolidated profit before loan-loss reserves
reached Rp 343.60 billion in 1997, up 58.4 percent from 1996.

The huge amount for the provision for the loan loss, however,
resulted in a year-on-year drop in consolidated net profit by 47
percent to Rp 70 billion in 1997.

The bank said that by the end of last year, it had booked an
interest income of Rp 472.69 billion, up 42.3 percent compared to
1996, resulting from the interest of interbank transactions.

A tight liquidity environment and declining confidence in the
domestic banking sector have forced many banks to secure their
balance sheet by going into the interbank money market.

The bank also said that it enjoyed a lucrative profit from its
over the counter foreign exchange transaction, which resulted in
a 799 percent jump in forex income to Rp 73.98 billion.

Economic uncertainty has spurred public demand to buy foreign
currencies for a variety of reasons, including for protection
against an expected hyperinflation and other potential losses.

In mid-March 1998, the U.S. investment bank Merrill Lynch said
that Bank Bali would be one among the very few Indonesian private
banks to survive the current crisis, pointing out the bank's
strong liquidity, cash flow and capital.

Bank Bali said its capital adequacy ratio last year was 10.78
percent, which was well above the previous minimum 8 percent
ratio requirement.

Last week, the country's financial authority slashed the
minimum ratio requirement for end-1998 to 4 percent due to
difficulties to fulfill the 8 percent level because banks' risk-
weighted assets had further deteriorated and the need to provide
huge capital to cover the expected sharp increase in
nonperforming loans amid economic hardships.

Bank Bali did not disclose its current ratio level, but
Merrill Lynch said recapitalization would remain a necessity and
that the bank should be able to accommodate the challenges. (rei)