Bank Permata to increase new loans, cut NPLs

Sari P. Setiogi, The Jakarta Post, Jakarta

Bank Permata, the product of mergers of five recapitalized banks, is targeting an increase in new loans by 30 percent this year and to lower its non-performing loans (NPL) by seven percentage points this semester.

President Agus Martowardojo told reporters in Jakarta on Monday that the bank would increase its lending from Rp 9 trillion (US$ 1 billion) as of the end of 2002 to Rp 11.5 trillion as of the end of this year.

He said that the bank, also known as PermataBank, would focus its lending on both the retail and commercial sectors this year.

He explained that the bank had allocated Rp 2.5 trillion for commercial banking, which included lending to small and medium enterprises (SMEs).

Agus said that the expansion was a way to decrease the bank's NPL from 12 percent at present to 5 percent by the end of this semester. For comparison, the NPL stood at 12.19 percent as of last September, the time of the merger of five banks -- Bank Bali, Bank Universal, Bank Media, Bank Prima Express and Bank Patriot -- into PermataBank.

Another way to lower the bank's NPL, according to retail managing director Irman A. Zahiruddin, was through the second sales of credit assets worth Rp 600 billion. In the first sales, held soon after the merger, the bank could raise total funds of Rp 700 billion.

He said that the process of the sales of the credit assets under the bank's second main asset selling program (PPAI) would be finished by the end of next month.

Agus said he was optimistic that the bank would be able to increase its capital adequacy ratio (the ratio of its capital against its risk-weighted loans) from 11.4 percent, reached as of the time of merger last September, to 14 percent by the end of this year.

Bank Indonesia requires commercial banks to have a minimum capital adequacy ratio or CAR of 8 percent.

PermataBank, with 329 branches across the country and 456 ATM facilities, now has 1.3 million consumers.

The bank, as of last December, generated Rp 21.8 trillion in funds from third parties. Out of the funds, 68 percent was put in the bank as time deposits and the other 32 percent in the form of other savings.

Last year the bank suffered a deficit of Rp 603 billion, particularly due to the spending of Rp 4.6 trillion for the merger. It had total assets of Rp 29.2 trillion -- the seventh largest among commercial banks in the country.

With an equity of Rp 1.6 trillion, the bank is now 97.67 percent owned by the government and 2.33 percent by the public.