BII expects big jump in profit next year

JAKARTA (JP): Publicly listed Bank Internasional Indonesia (BII) said it expected net profit next year to hit Rp 600 billion (US$63.15 million), up from an estimated Rp 250 billion this year.

BII vice president Yap Tjay Soen said on Wednesday the increase was largely the result of Rp 1.79 trillion from interbank claim settlements with the Indonesian Bank Restructuring Agency (IBRA).

"If we invest the proceeds (Rp 1.7 trillion) in, say, Bank Indonesia Certificates (SBIs) with an interest rate of 13 percent, then we can expect a net income of about Rp 200 billion for the year," Yap Tjay Soen said during a public expose by the bank.

IBRA took over the repayment of interbank claims for banks that have been placed under its supervision.

The agency has already paid BII some Rp 1.42 trillion for interbank claims from Bank Aken, Bank Dagang Negara Indonesia (BDNI), Bank Papan Sejahtera and Bank PSP, Yap Tjay Soen said.

According to him, IBRA will pay another Rp 1.17 trillion in interbank claims from Bank Umum Nasional (BUM) and Bank Bira.

Under an agreement on the payment of the claims, IBRA is to pay 20 percent of the amount in cash and 80 percent in the form of restructured loans.

Yap Tjay Soen said BII had worked out a bilateral settlement with Bank Tiara for interbank claims amounting to Rp 140 billion.

In total, BII will receive Rp 1.79 trillion in cash from its settlement of interbank claims, Yap Tjay Soen said.

However, he declined to classify the receipts of BII's interbank claim settlements as extraordinary revenue in its 2001 project cashflow.

He said the bank would capitalize on interest income from the receipts, which the bank planned to invest in various things, including SBIs.

"Only about Rp 100 billion of the interbank claims will count as extraordinary income in the Rp 600 billion of next year's net profit," Yap Tjay Soen said.

As of September 2000, BII had booked a net income of Rp 183 billion, with net interest revenue of Rp 580 billion.

However, its capital adequacy ratio (CAR) is only 6.75 percent, far lower than most other banks recapitalized by the government.

CAR measures the ratio of a bank's capital against its risked weighted assets. The government is requiring banks to have a minimum CAR of 8 percent by the end of 2001.

Yap Tjay Soen said he was confident the bank could reach this minimum CAR level, because of the estimated earnings BII would generate next year.

He added that IBRA was negotiating with BII's main shareholder, the Sinar Mas Group, to restructure the bank's loans, valued at over $1 billion, to affiliated companies under Sinar Mas.

BII violated lending limit regulations by channeling more than 10 percent of its total loan portfolio to affiliated companies.

Yap Tjay Soen said if the negotiations succeeded, BII could lower the percentage of its risked weighted assets, thus raising its CAR level.

According to him, companies under the Sinar Mas Group are negotiating directly with IBRA to pledge assets of more than $1 billion to the agency.

BII is 18 percent owned by the Sinar Mas Group, 57 percent by IBRA and 25 percent by the public.(bkm)