Bank Niaga expects net loss in first quarter

JAKARTA (JP); Publicly listed Bank Niaga is expecting a net loss in the first quarter this year against a net profit of Rp 31.81 billion (about US$3.18 million) over the corresponding period last year, its president said yesterday.

Gunarni Suworo said the predicted downturn was due to the increase in the loan loss provision to Rp 39.8 billion.

"Our income will become negative due to the increase in loan loss provision for possible bad debts," she said after a shareholders meeting .

Gunarni declined to mention the amount of the loss.

The bank, which recorded a 54.51 percent decline in net profits to Rp 44.57 billion last year, had also increased its loan loss provision to Rp 207.1 billion in 1997 from Rp 64.9 billion the previous year, she added.

"The increase of loan loss also caused our net profit to decline sharply in 1997."

She warned that the country's economic predicament, which is expected to worsen in the coming months, would cause most companies to face problems in repayment of loans to the banking system.

The inevitable result would be the likelihood of mounting bad debts.

She said Bank Niaga expected bad debts to increase from between 15 percent to 30 percent this year, similar to the average growth rate of bad credits in the national banking industry.

The bank's problem loans, which include doubtful and bad credits) reached 5 percent, she said, adding that bad credit alone was 0.9 percent.

"Due to this, there will be no more expansion plans this year."

The bank, which allocated total credits of Rp 9.09 trillion by the end of 1997, is also seeking foreign investors to boost its capital.

"But it is still in the preliminary stage and hopefully it will be finalized by the end of this year."

She declined to identify the foreign institutions involved because "it is too early".

Gunarni said the bank had obtained approval from its shareholders to raise its capital to Rp 1.4 trillion from the current Rp 750 billion as part of its move to meet the new capital requirement set by the central bank.

Bank Indonesia raised the minimum capital requirement for commercial banks to Rp 1 trillion by year-end, Rp 2 trillion in 2000 and Rp 3 trillion in 2003 as part of the measures to revitalize the country's financial sector.

Gunarni also denied rumors the bank was experiencing liquidity problems and was poorly managed after Hashim Djojohadikusumo's Tirtamas Group failed to make a full payment on its planned acquirement of the Tahija's family's 40 percent shares.

In July last year, Tirtamas' financial holding company Tunamas Panduarta bought a 10 percent stake in Bank Niaga through a public tender offer.

It also entered into an agreement with Tahija's wholly owned Austindo Teguhjaya and Austindo Nusantara Jaya to buy the latter's 75.63 million shares, or 40 percent of the bank's capital, at Rp 8,000 per share.

"I do not know about this transaction, but it is based on a 'willing buyer and willing seller' transaction," she said.

According to the bank's 1997 financial report, Austindo Teguhjaya retains a 10.49 percent stake in the bank and Tunamas has 39.51 percent.

Other shareholders are RHB Bena Sdn. Bhd. with 20 percent, life-insurer AJB Bumiputera 1912 with 5.42 percent and the public with 24.57 percent. (aly)