Bank BNI to open new branch in LA later this year

Bank BNI to open new branch in LA later this year

JAKARTA (JP): State-owned Bank Negara Indonesia (BNI) is to open a new branch in Los Angeles later this year and financing arms in Hong Kong and Luxembourg as part of its overseas expansion program.

BNI president Widigdo Sukarman said yesterday that the Los Angeles office will be the second branch in the United States after the one in New York.

"We expect to increase the number of overseas branches to eight by the year 2000," he said.

BNI, which at present has six overseas branches -- in the Cayman Islands, New York, Tokyo, Hong Kong, Singapore and London -- is currently preparing the establishment of two merchant banks, in Luxembourg and Hong Kong, as part of the expansion program.

He said that the overseas expansion is essential to tap growing activities of Indonesian companies abroad and to benefit from the increase in the number of local borrowers seeking funds from offshore financial sources.

The bank is also expanding its domestic networks. It currently operates 485 branches, mostly in Java, Sumatra and Bali, and 300 automated teller machines in Jakarta and other cities in Java.

Widigdo, who replaced Winarto Sumarto as the bank's president in April, said that BNI is also placing more emphasis on retail banking to serve the growing number of medium-scale companies at home.

At present BNI provides around 60 percent of its loans for corporate borrowers and another 40 percent for its retail clients.

"We hope the segment of our retail market will reach 50 percent in the next few years," he said.

Widigdo said that the bank's total assets reached Rp 31.81 trillion (US$13.83 billion) as of March this year, with outstanding loans amounting to Rp 20.7 trillion and deposits exceeding Rp 18 trillion in the same period.

The pre-tax profits in the Jan-March period totaled Rp 112.6 billion, he said.

Widigdo, who was the president of the state-owned Bank Tabungan Negara before assuming his present job, said that the bank's bad (totally unpaid) loans were 0.58 percent of its total lendings.

He, however, said that the amount of problematic loans is much higher, around 4 percent of total loans.

In 1995, BNI, the largest state-owned bank, reported a 26.1 percent increase in its pre-tax profits to Rp 410.1 billion in 1995.

The bank's pre-tax profits are projected to increase to Rp 445 billion this year.

Widigdo said that the bank's assets and lendings are expected to increase respectively by 12.8 percent and 17 percent this year.

BNI has also almost completed its preparations to go public, he said but he declined to unveil when the public offering would be launched.

"I cannot tell you when but for sure we will do it this year," he said of the flotation. It was earlier scheduled for July.

He also declined to detail the number of the bank's shares to be sold or the value of the fresh funds to be raised from the planned initial public offering.

Widigdo said the bank has appointed GP Morgan as a consultant for the public offering and assigned state-owned Danareksa Sekuritas as the lead underwriter.

According to an earlier report, the bank expects to raise around Rp 100 billion (US$48 million) from the planned public offering. (hen)