Bank NISP plans bond issue to boost lending

JAKARTA (JP): Publicly listed Bank NISP will soon issue bonds worth Rp 500 billion (US$6.6 million) to boost its lending operation.

The bank's president, Pramukti Surjaudaja, said on Monday that five-year bonds would be offered to the public between Sept. 17 and Sept. 29.

The bonds, which would be listed on the Surabaya Stock Exchange on Oct. 15, would carry fixed and floating interest rates.

The fixed rate would be about 1.5 percent to 2.5 percent above the three-month Bank Indonesia promissory notes (SBIs) interest rate, he said, adding that the bank would use the SBI rate at the central bank's weekly auction on Sept. 1 as the basis to set the bond yield rates.

The three-month SBI rate is at 13.12 percent.

He said that about 80 percent of proceeds from the bonds would boost working capital loans, while the remaining 20 percent would increase investment loans.

State-owned securities company PT Danareksa Sekuritas and Sucorinvest Central Gani will be the lead underwriters.

Bank NISP said that its pretax profit dropped slightly to Rp 17.88 billion in the first semester ended June 30 from Rp 18.79 billion in the previous period.

But the bank's net profit showed an increase of about 25 percent to Rp 14.40 billion in the January-June period from Rp 11.54 billion in the first semester last year, partly due to a sharp drop in income tax allocation.

The bank's interest income surged 28 percent to Rp 321.56 billion in the first semester from Rp 250.71 in the same period last year. The net interest income, however, rose slightly to Rp 57.92 billion in the first semester from Rp 57.34 billion, partly due to a surge in interest spending from Rp 197.38 billion to Rp 265.69 billion.

The bank's capital adequacy ratio (CAR) was at 21.09 percent as of June, up from 13.72 percent in the same month last year. The bank's CAR was far above the government's requirement of 4 percent.

Meanwhile, Thomson Financial BankWatch on Monday assigned a senior local currency debt rating of LC-BBB to Bank NISP, and has affirmed its short-term debt rating of LC-3.

The ratings agency said the bank's conservative strategies in the pre-crisis period and its pro-active management and defensive stance during the crisis have served it well.

"The bank is positioned to play an important role among the few remaining private banks as the economy begins to pick up," Mark Jones, vice president at Thomson BankWatch was quoted by Dow Jones Newswires as saying.

The ratings agency cited a number of positive factors, including NISP's solid capital base, boosted in fiscal year 1998, and steady growth in the deposit base through the first half of the year. (hen)