Wed, 22 Mar 2000

Bank Mandiri expects Rp 725b net profit this year

JAKARTA (JP): President of Bank Mandiri Robby Djohan expects the giant state-owned bank to book a net profit of Rp 725 billion (US$97.32 million) in net profit this year, compared to a loss of Rp 36.86 trillion last year.

Speaking at a hearing with the House of Representatives Commission IX on finance and state budget, Robby said that net profit per February 2000 was Rp 318 billion.

He said that the bank would provide around Rp 8 trillion in new lending this year, an increase of 4 percent.

He said that some Rp 3.98 trillion of the new lending would be in the form of corporate lending, and Rp 4.09 trillion in commercial and retail loans.

He said that most of the new lending would be directed toward the export industry, pulp and paper, palm oil and plantation industry, and consumer products.

"There's been strong demand for consumer products. Even foreign investors are seeking to buy (Indonesian) consumer products industry," he said.

Robby said that the relatively low 4 percent growth was due to the current stagnant market.

"We don't want to push the asset growth to 10 percent or 20 percent amid the current conditions or we will be facing the same bad debt problem again," he said.

He said that the Rp 8 trillion lending volume already represented a 30 percent share of the domestic loan market.

Bank Mandiri was formed last year by merging four ailing state banks including Bank Bumi Daya (BBD), Bank Ekspor Impor Indonesia (Exim), Bank Dagang Negara (BDN), and Bank Pembangunan Indonesia (Bapindo).

The government completed recapitalization of the bank last year by injecting some Rp 178 trillion worth of bonds to boost its capital adequacy ratio (CAR) to 12.8 percent at end of January.

Robby said that Bank Mandiri's assets at end of December totaled Rp 221 trillion.

He said that the bank's return on equity was expected to reach 22.46 percent this year and return on assets to reach 1.33 percent.

Bank Mandiri is planning to offer from 25 percent to 30 percent of its shares through an initial public offering (IPO) early next year in a bid to raise around US$1.5 billion.

Robby said that five world-class investment banks had applied to become the lead underwriter of the IPO.

"I'm optimistic that the $1.5 billion target can be fulfilled ... as long as there's no negative news (on Bank Mandiri)," he said.

"The success of the IPO will not only benefit Bank Mandiri but also the whole economy," he added.

Asked if he had already picked any successor, Robby said: "I expect my successor to come from the inside. There's plenty of brilliant young people here (in the bank)."

There have been rumors that Bank Mandiri managing director Agus Martowardojo is favored as Robby's successor.

"I don't have problems if I have to step down from Bank Mandiri. But I expect to be able to lead the bank at least until the completion of the IPO," Robby said.

Robby said that one of the most challenging tasks now was how to change the culture of the bank's staff from a bureaucracy orientation to a market orientation.

"It is very painful to see that our cultural development has been slow," he said, pointing out that this was mostly observed in the bank's branch offices scattered throughout the region.

Bank Mandiri now has a total of 630 branches, compared to 740 before the merger. The bank is expected to reduce the branches to around 546 by the end of this year.(rei)