Bank Danamon plans to expand lending by 75%

JAKARTA (JP): Publicly listed Bank Danamon plans to increase its outstanding credits by about 75 percent to Rp 10.4 trillion (US$1 billion) this year from Rp 5.9 trillion in 2000, a senior executive at the bank said on Wednesday.

Bank Danamon vice president Armand B. Arief said here on Wednesday about 30 percent of Rp 4.5 trillion in fresh loans would be channeled to medium and large businesses, 25 percent to small firms and the rest would go for consumer financing.

"We hope with the credit expansion we will be able to improve our profit margin," Armand said after signing a cooperation agreement with Hongkong and Shanghai Banking Corporation (HSBC) Indonesia.

Bank Danamon's net profit is projected to increase 60 percent to Rp 500 billion from Rp 306 billion last year, he said, adding that last year was a turning point for the bank after suffering a loss of Rp 7 billion in 1999.

Bank Danamon, which was one of the country's largest private banks, was nationalized by the government in April 1998 after its shareholders failed to repay emergency funds from the government. The funds were channeled to save the bank from collapse after is suffered financial problems due to the country's economic crisis.

The government merged Bank Danamon with eight other smaller nationalized banks -- Bank Rama, Bank Tiara Asia, Bank Duta and Bank Tamara, and nonlisted Bank Pos, Bank Jaya, Bank Nusa Nasional and Bank Risjad Salim -- last year as part of its bank restructuring program.

Armand said the bank also allocated Rp 3 trillion in funds this year to take over restructured loans from the Indonesian Bank Restructuring Agency.

He also said the bank would diversify its sources of funding, which are currently dominated by savings and time deposits, in a bid to reduce operating costs.

Under the cooperation agreement signed on Wednesday, holders of HSBC credit cards can pay their credit card bills at any of Bank Danamon's 500 branches across the country.

Bank Danamon will receive a fee of Rp 5,000 for each transaction.(05)