BII hit by Rp 1.02t loss in first half

JAKARTA (JP): Bank Internasional Indonesia (BII), one of the country's largest private banks, said on Wednesday it suffered a loss of Rp 1.02 trillion (US$150 million) in the first half of 1999, compared to a loss of Rp 5.41 trillion in the same period last year.

BII said that interest expenses exceeded interest revenues by Rp 765 billion for the period, which reflected the broad negative interest rate spread problem plaguing the banking sector.

BII consumer banking director Doddy Susanto said that the bank would channel between Rp 4.2 trillion and Rp 4.5 trillion in credit to prevent a further negative spread loss.

"We have to lend our money in order to survive," he told a media conference.

Doddy said that the time deposit rate of about 15 percent was now greater than the central bank SBI promissory note interest rate of slightly more than 13 percent.

BII expected to show a positive spread in the third quarter of this year.

He said that the bank provided some Rp 82 billion in loans to 570 customers in July and vowed that it would be more "aggressive" in the coming months.

He said that its housing mortgage loan was now offered at an interest rate of 18-24 percent, automotive credit at 12.5 percent and working capital loan at 24 percent.

"We're targeting an interest rate of about 21 percent toward the end of the year," Doddy said, adding that the rate was near the precrisis level.

Doddy said that the bank would also be selective in picking debtors to minimize risk.

"We'll stay away from sensitive sectors like property," he pointed out.

But he said that the overall economic and political condition was ripe enough for domestic banks, particularly those with overabundant liquidity, to resume lending.

"Not all companies are bad. They need a working capital," he said.

Doddy said that BII had between Rp 33 trillion and 34 trillion in third party funds which a part of must be lent to the real sector.

"We'll try to manage our time deposits at this level," he said.

BII Commissioner G. Sulistiyanto urged other banks to resume lending to help the battered real sector.

"We'll try to become the trendsetter here," he said.

Indonesian banks have practically stopped lending since last year following the country's economic crisis which caused some 66 banks to be closed down and most major banks to become insolvent.

The central bank allowed its benchmark interest rate to drop significantly to 13.13 percent on Wednesday from more than 35 percent in the beginning of the year in hopes of encouraging local banks to resume lending.

BII is one of the country's seven major private banks which were recapitalized with the help of government funding. The bank was part of the well-diversified Sinar Mas Group.

BII said that its consolidated capital adequacy ratio (CAR) improved to 14.3 percent at the end of June this year as its total equity capital reached Rp 3.17 trillion while risk weighted assets were at Rp 22.13 trillion.

The bank added that its paid-up capital increased by Rp 11.44 trillion to Rp 13.06 trillion in June after the completion of its recapitalization program.

It said the government contributed Rp 6.63 trillion of the total funds needed for the recapitalization program.

The government currently has a 59.2 percent stake in BII, while the founding owner has about a 20 percent stake and the public held the remainder.

"We are determined to lower government ownership in the bank to zero by the end of the year to help ease the burden of the state budget," Sulistiyanto said.

He said that the bank was in negotiations with several prospective investors.

The government is providing up to 80 percent funding for the recapitalization program of the country's private banks. The government issued more than Rp 100 trillion worth of bonds to recapitalize seven private banks, and the interest rate of the bonds would be covered by the state budget. (rei)