Bank NISP sees 25% net profit rise

Bank NISP sees 25% net profit rise

SINGAPORE (Reuter): Publicly listed Bank NISP said yesterday it expected to boost its net profit at least a quarter this year by moving into a range of new products.

President and chief executive officer Pramukti Surjaudaja said NISP, one of the smallest but best-rated of Indonesia's private banks, was gradually moving out of its traditional retail base into commercial and fee-based operations.

In 1996, the bank made a net profit of Rp 19.3 billion (US$6.66 million) and had a net interest income of Rp 54.40 billion. Of its total income, roughly 10 percent came from fee- based activities, he said.

"This year we plan to increase our net income by at least 25 percent and we feel it may be above this because if you look at our track record in the past, we have been building at level," Pramukti told Reuters in an interview.

He was in Singapore for a briefing for clients.

"That will come mostly from the retail and commercial businesses. Our prime market is the middle market. Our average of loan is only about 100 million rupiah and an average deposit is four million," he said.

Formed in 1941 under the Dutch colonial administration as NV Nederlandsch Indische Spaar en Deposito Bank, NISP was floated on the Jakarta stock exchange in 1994.

It is Indonesia's 30th biggest private bank in terms of assets but has been ranked between fourth and sixth for credit by various independent agencies over the last three months.

Its loan-to-deposit ratio is now 72.9 percent, one of the highest among Indonesian banks.

More than 80 percent of its business is still pure retail from interest income but Pramukti said this was gradually changing as its commercial activities grew.

"In terms of sectors, we are already very well spread with the service industries (accounting for) some 25 percent, manufacturing about 25 percent and trading about 25-30 percent."

"Fee-based income now accounts for only about 12 percent of total income. But that has to rise because we believe in the future (retail) pricing will be very tough," he said.

"We expect it (fee-based income) to rise by about 30 to 40 percent...towards 15-20 percent of total income," he said, without giving a time frame.

Pramukti said the bank was expanding into new products for its retail clients such as insurance, which it was doing in partnership with German insurance giant Allianz Life.

"This is a captive market. If people want to borrow some money and they want to be insured, we sell them these products.

"We are also studying custodian services and of course LC (letters of credit) business," he said.

He said the bank aimed to maintain its high ratings.

"The biggest is not necessarily the best. But we would aim to be maybe in the top 15 banks," he said.

He said turbulence in Asian currency markets, in which the rupiah plunged to a low of 3,045 to the U.S. dollar from 2,360 at the beginning of the year, had not yet affected the bank.

"Up to now it hasn't been significant but if the conditions continue as they are now for a few months more, then we will be affected," he said. But there would be no profit downgrade.