Bank Servitia sees more bad debts this year

Bank Servitia sees more bad debts this year

JAKARTA (JP): Publicly listed Bank Servitia has raised its
loan loss provision this year by about 30 percent to anticipate
an increase in nonperforming loans.

Bank Servitia's marketing director Tarunodjojo Nusa said
that bank's loan loss reserves rose by 30 percent to Rp 14.5
billion (US$4.02 million) as of September this year, from Rp 11
billion in the same period last year.

He estimated that nonperforming loans would increase this year
as many corporate borrowers, hit by the currency turmoil and high
interest rates, would face difficulties paying their due debts.

"Since the impact of the currency turmoil will also be felt
next year, we have to increase the loan loss provision to Rp 20
billion in 1998 and between Rp 24.5 billion and Rp 25 billion in
1999," he told journalists after signing a cooperation agreement
with the United Nations Childrens' Fund (Unicef).

He said that the currency crisis, which has caused the rupiah
to decline 40 percent against the American dollar since July,
would certainly result in an increase in nonperforming loans.

"That is the reason why we increase our loan loss provision
from year to year," he said.

He said that the bank allocated total credits of Rp 1.48
trillion as of September this year compared to Rp 896.65 billion
in the same period last year.

He said the bank had also raised Rp 1.40 trillion in public
funds as of September this year compared to Rp 862.80 billion in
the corresponding period last year.

Tarunodjojo said the bank expected to record a Rp 22 billion
net profit this year, in line with the previous projection.

He said that Bank Servitia, which had total assets of Rp 1.7
trillion as of September and expects this to increase to Rp 2
trillion next year, plan to issue rights shares next year to
raise about Rp 150 billion from the public.

"Proceeds from rights share issuance is expected to increase
the bank's paid up capital to Rp 250 billion," he said. (aly)