Bank Mandiri forecasts profits to triple in 2000

JAKARTA (JP): The state's newly established Bank Mandiri expects to triple its profits from about Rp 400 billion this year to around Rp 1.2 trillion in 2000, according to the bank's president and chief executive, Robby Djohan.

The bank's assets, however, were predicted to grow by only 10 percent next year.

"We can't expect the assets to grow faster because it will need a lot of capital to do so. We don't have that much capital," he told reporters on Thursday on the sidelines of an investment seminar.

He said Bank Mandiri's liquidity would probably not be enough to allow the bank's assets to grow more than 10 percent.

Bank Mandiri was formed last October to merge four state banks: Bank Export Import Indonesia, Bank Pembangunan Indonesia, Bank Bumi Daya and Bank Dagang Negara.

The legal merger itself is scheduled to take place at the end of the month with all the four banks handing over their assets to Bank Mandiri.

Bank Mandiri would then undergo recapitalization, which will be funded by the government. The government has allocated some Rp 137.8 trillion to fund the recapitalization program of several troubled banks.

The profit estimate for Bank Mandiri, which will also take over the corporate-lending portfolio of state-owned Bank Rakyat Indonesia, is based on the latest balance sheets of the merged banks.

Robby said the government was expected to begin recapitalizing the bank later this month and finalize the program by the end of the year.

He said the recapitalization would occur gradually.

"I want to recapitalize the bank only when it is ready. There are certain areas that still need improvement," he said.

He said areas that still needed to be restructured include the bank's investment portfolio, branch management, human resources and organizations.

"Hopefully, the restructuring of all these things will be done by the end of this year. Then I can say that the bank is ready for total recapitalization," he said.

He said Bank Mandiri would concentrate on being a retail bank with priorities in particular sectors, including fee-based income and pre-finance.

"Retail banking is going to be very important and I think it will probably pick up," he said.

He said the bank was ready to offer loans to eligible indebted companies currently trapped by bad debts to help them accelerate the recovery process.

According to Robby, Bank Mandiri currently handles around Rp 40 trillion worth of non-performing loans taken out by a number of indebted companies. (cst)