Bank posts positive interest margin

JAKARTA (JP): Publicly-listed Bank Universal reported on Wednesday it had posted a positive net interest margin since December, compared to negative margin of 50 percent in the last quarter of 1998 and minus 1.02 percent as of September 1999.

"This improvement resulted from the better management of the costs of our fund and the resumption of lending," the bank's president, Stephen Z. Satyahadi, said.

Stephen said Bank Universal had resumed lendings, though still in small sums and after 'extra' careful assessment, mostly to the retail sector and contractors working for resource-based businesses.

It would, however, take some time before lendings to the manufacturing industry could resume, he added.

"The problem is that most manufacturing companies are still in the process of restructuring their debts under the supervision of the Indonesian Bank Restructuring Agency (IBRA)," Stephen said.

He said customer deposits at Bank Universal increased to Rp 8.77 trillion (US$1.16 billion) as of last September from Rp 8.09 trillion as of June.

Bank Universal was the first publicly-listed bank to complete recapitalization last June, having achieved the government-set minimum capital adequacy ratio of 4 percent.

The bank is now controlled by the government with a total shareholding of 78.91 percent. PT Astra International owns 11.52 percent and the investing public the remaining 9.57 percent.

"But our capital standard has increased steadily to reach 6.70 percent as of last September," Stephen added.

He said the recapitalization had also begun to restore foreign banks' confidence in Indonesia's banking industry.

"Bank Universal, for example, has thus far been approached by four foreign banks in the process of reopening correspondent banking.

"This is really a positive sign not only for the banking industry but also for the business sector in general as correspondent banking would facilitate trade financing," Stephen said.

Almost all foreign banks have stopped accepting letters of credit opened at Indonesian banks in the wake of the banking crisis in early 1998.

He hoped IBRA would speed up the restructuring of more than Rp 200 trillion in bad debts currently under its management so that the debtor companies could soon resume borrowings and recapitalized banks could significantly expand lending operations.