Bank Lippo expects more growth despite LBC woes
Bank Lippo expects more growth despite LBC woes
JAKARTA (JP): Publicly listed Bank Lippo projects further
profit growth this year amid reports its independent counterpart,
Lippo Bank of California (LBC), was suffering financial problems.
Lippo's president, Markus Parmadi, said Bank Lippo would
continue to improve this year and had already shown significant
improvements so far this year.
"Early indicators for 1997 point to yet another banner year,
especially in view of the bank's improved capital position," he
said.
The bank reported a 39.1 percent rise in net profit to Rp
116.5 billion (US$48.16 million) last year.
Its capital position improved to Rp 1.2 trillion because of a
of a 1-for-2 rights issue last year which generated additional Rp
299.9 billion.
The bank's total assets rose 33.6 percent to Rp 10.2 trillion.
"Lippo Bank's performance in 1996 was encouraging. Profits
were healthy, growth sustainable, and liquidity and loan quality
excellent," Markus said.
Lippo Bank, which is one of Indonesia's leading commercial
banks and controlled by the Riady family, operates in retail,
commercial, consumer, international and investment banking
facilities.
At the end of February this year it was capitalized at Rp 2.33
trillion. The bank is listed on the Jakarta and Surabaya stock
exchanges.
Despite the bank's improvement, its independent counterpart,
LBC has been was facing financial and management problems.
A recent sanction by the US federal banking regulator, Federal
Deposit Insurance Corp (FDIC), required the Los Angeles-based
bank to restructure its banking and lending practices.
The daily The Business Times reported LBC had agreed to FDIC
sanction to raise the bank's shareholder capital, reduce its
nonperforming loans, develop more stringent loan underwriting
standards and bring in Secura Group to evaluate the management.
LBC is owned by James Riyadi, the son of Mochtar Riady, the
vice-chairman of PT Lippo Bank.
PT Lippo Bank representatives in Jakarta were unavailable for
comment on the sanction.
Markus said international confidence in Bank Lippo, previously
called Lippobank, was very encouraging.
The international confidence was reflected by the strong
response from foreign investors to the bank's recently issued
certificates of deposit.
Earlier in February, the bank issued a US$60 million
Negotiable Floating Rate Certificate of Deposit (FRCD) on the
international market. A consortium of 19 banks from Europe, Asia
and the United States participated.
The FRCD, the largest the bank has issued, was oversubscribed,
raising the original US$50 million offer to US$60 million, Markus
said.
"We are pleased with the international banking community's
confidence in Lippo bank, as shown by the oversubscription of the
FRCD," he said. (02)