BII expects big jump in profit next year

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)