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)