Bank Bira to set up multifinance firm

JAKARTA (JP): Publicly-listed Bank Bira will set up a multifinance joint venture company with Korea Merchant Banking Corporation (KMBC).

Bank Bira's president, Bambang Panutomo, said yesterday the joint venture aimed to strengthen the bank's investment banking position.

KMBC would own 65 percent of the joint venture and Bira 35 percent, Bambang said during the bank's annual shareholder meeting.

"We are waiting on government approval for the venture company," he said.

The bank has also set up an alliance with financial services provider GE Capital USA. GE Capital has a strong presence in the United States and Europe.

Bambang said the alliance would strengthen Bank Bira's consumer banking business, especially its credit card and mortgage businesses.

The bank reported a 91.1 percent rise in net profit during the first quarter of this year to Rp 20.4 billion (US$8.24 million), up from Rp 10.7 billion in last year's first quarter.

The profit rise was underpinned by a 33.5 percent increase in interest income and higher net interest margins.

Interest income grew to Rp 113.6 billion in this year's first quarter, up from Rp 85.1 billion for the same period last year.

The bank's net interest margin improved because of lower interest rate expenses.

Interest rate expenses rose by only 11 percent to Rp 68.7 billion.

Bank Bira's loans for this year's first quarter were Rp 2.14 trillion, up 43 percent from Rp 1.5 trillion in the same period last year.

Bambang said the bank's loan loss reserve rose from Rp 16.6 billion to Rp 28.3 billion.

He said the bank's loan portfolio was healthy despite the loan loss reserve increase.

"We believe our reserve of 1.32 percent is more than enough to cover the nonperforming loans which are around 0.5 percent of total loans," he added.

The bank lowered its deposit rate 50 basis points last December, while lending rates were stable over the same period, he said.

The bank expected its net interest margin to remain stable in the next quarter, despite an increase in general reserves to 5 percent since April 16, he said.

"Our bank was also recognized as the best domestic investment bank in Asia by the Hong Kong-based PY Finance Asia magazine, noted Bank Bira's Corporate Financial Advisor Parveen Gandhi.

Gandhi added that Asiamoney, another magazine in Hong Kong, also voted Bank Bira the Investment Bank of the Year for Indonesia.

According to BZW Niaga research, Bank Bira was the most profitable listed bank in terms of return on assets (ROA) and return on equity (ROE) last year.

"Our ROA was 2.68 percent and ROE was 23.5 percent last year," Bambang said.

The bank was among the top ten listed companies which outperformed the Jakarta Stock Exchange composite index. It outperformed the market by 59.7 percent. (das)