Bank Bira vows to boost its fee-based business

Bank Bira vows to boost its fee-based business

JAKARTA (JP): Publicly-listed Bank Bira said yesterday it has
expanded into several new services, including advisory and
technical assistance for smaller banks, in an attempt to boost
its fee-based revenues.

"Like other merchant banking activities, these new services
are promising income sources and we, therefore, will try to be
more active in those areas while further strengthening our
traditional banking activities," Bank Bira's president, Bambang
Panutomo, told stock analysts yesterday.

"For technical assistance, we are currently in the due
diligence stage with one smaller bank, and within next 12 months
we expect to get two more banks," Bambang added.

He said that in any technical assistance program, which has a
term of three years, Bank Bira will provide four professional
staff members with different areas of expertise. Bank Bira will
earn retainer fees and annual fees for such technical assistance.

He declined to mention the exact amount of fees set by the
bank but he said "the retainer fees for our four staff members
are equal to the total salaries for 20 executives at Bank Bira,
while the annual fee will be in form of a certain percentage of
the clients' profits."

Commenting on the bank's merchant banking activities, Bambang
said that starting from early this year, Bank Bira has increased
its foreign exchange trading activities and trade financing.

"Currently, the total treasury activities average at US$100
million daily compared to an average of $20 million in December
1995," Bambang said.

"In trade financing, we have been able to increase our
activities to over $25 million per month, compared to only $7
million at the end of last year," he said.

On other merchant banking activities, Bambang said that as of
July, Bank Bira had arranged a total of $930 million in
syndication loans.

The bank expects to have arranged up to $1.5 billion in
syndication loans by the end of this year.

Bambang said the bank has been able to obtain new significant
sources of fee-based revenues, primarily from foreign exchange
transactions and trade financing.

"Out of our Rp 73 billion gross income in the first six months
of this year, 72 percent was net interest income, while the
remaining 18 percent was derived from loan arrangements and other
transaction fees," he said. "We will try to maintain this
proportion in the next few years."

He said that gross income from loan arrangements, including
loan syndication, medium term notes and zero coupon bonds,
amounted to Rp 9.5 billion (US$4 million), while income from
other transaction fees -- comprising of forex transactions,
commercial papers and trade financing -- amounted to Rp 11.2
billion.

Performance

Bambang said that Bank Bira registered a net profit of Rp 27
billion in the first six months of the year, indicating a 103
percent increase from Rp 13 billion in the same period of last
year. The bank's earning per share also rose by 54 percent to Rp
395 from Rp 257.

Bank Bira, which currently has total assets of Rp 2.2
trillion, generated total deposits of Rp 1.3 trillion as of June
30, compared to Rp 1.1 trillion as of June 1995.

Total loans amounted to Rp 1.6 trillion as of June 1996,
against Rp 1.2 trillion as of June last year.

"The loan growth as of June 1996 represented a 16 percent
increase from last year-end. It means that we still have room for
credit expansion in the few years to come because our credit
ceiling stipulated by Bank Indonesia is 25 percent," Bambang told
journalists after yesterday's analysts meeting.

Responding to an analyst's question about whether Bank Bira is
currently preparing any alliances with foreign banks, Bambang
said: "We have been approached by one European bank and two
American banks, which are looking for a strategic partnership.
But we currently have no plans to establish any joint ventures."

Bambang confirmed that Bank Bira, in cooperation with a
foreign partner, will launch a mutual fund.

"But the operation of the planned mutual fund, which will have
a size of Rp 200 billion to Rp 300 billion, is still subject to
approval from the Capital Market Supervisory Agency," he added.
(alo)