Bank Mandiri profit rising to Rp 2.5t

Bank Mandiri profit rising to Rp 2.5t

JAKARTA (JP): The giant state-owned Bank Mandiri expects gross
profits to increase to Rp 2.5 trillion (US$269 million) this year
from Rp 2.1 trillion last year, the bank's president, E.C.W.
Neloe, said on Tuesday.

Neloe said that the bank would channel around Rp 4.5 trillion
in new lending this year plus another Rp 7.5 trillion in
corporate loans to be purchased from the Indonesian Bank
Restructuring Agency (IBRA).

The government has allowed banks to exchange part of the
government bank recapitalization bonds with the restructured
loans under IBRA.

Speaking to reporters following a ceremony marking the
cooperation agreement with national flagship carrier Garuda
Indonesia, Neloe said that the bank was set to go public in
September this year.

He said that the bank planned to offer 30 percent of the
shares through an initial public offering (IPO).

But he said that the IPO plan would depend on market
conditions and be subject to approval by the government.

Coordinating Minister for the Economy Rizal Ramli said late
last year that Bank Mandiri was expected to be able to launch an
IPO some time in the fourth quarter of 2001.

Bank Mandiri was formed in 1999 from the merger of four ailing
state banks -- Bank Bumi Daya (BBD), Bank Ekspor Impor Indonesia
(Exim), Bank Dagang Negara (BDN), and Bank Pembangunan Indonesia
(Bapindo).

The government recapitalized the bank by injecting some Rp 178
trillion worth of bonds.

Neloe said that the bank's capital adequacy ration was now at
about 23 percent.

Elsewhere, Neloe said that Bank Mandiri's overseas debt
maturing this year totaled US$560 million.

But he said that the company had more than sufficient cash
flow to service the debt.

He pointed out that Bank Mandiri had total assets of about Rp
228 trillion, and core equity of about Rp 6 trillion.

"The debt will not endanger Bank Mandiri ... We can repay it,"
Neloe said.

Separately, Bank Mandiri managing director Agus Martowardojo
said that the bank was targeting to raise about Rp 20 trillion in
third party funds this year.

"Raising third party funds will be our top priority this
year," he said.

He said that the new government policy to increase the income
tax on time deposits and savings from 15 percent to 20 percent
would not hamper the bank's fund raising programs because the
bank planned to raise the interest rate on its time deposits to
lure depositors.

Agus said that the increase in interest rate would not cause a
negative spread because the government bank recapitalization
bonds held by the bank were mostly bonds carrying a variable
interest rate.

Some analysts have said that higher interest rates on time
deposits would hurt banks, particularly those holding government
bonds carrying a fixed interest rate of 12 percent. (rei)