BII plans to increase consumer, commercial lending
The Jakarta Post, Jakarta
Bank Internasional Indonesia (BII), the country's sixth largest lender in terms of assets, plans to boost its consumer and commercial lending this year to 60 percent of total new loans.
BII director Dira K. Mochtar said on Thursday during a meeting with investors that the publicly listed, foreign-controlled bank planned to provide some Rp 6 trillion (about US$705 million) in new lending this year.
"Lending for corporations would consequently take up the rest," said Dira.
Last year, BII had allocated around half of its Rp 6.2 trillion new loans to the corporate sector, Dira added, while the remainder went to the consumer and commercial sectors which include the small- and medium-sized enterprises (SMEs).
BII vice president Armand B. Arif said the bank had taken a number of steps to improve its competitiveness in gaining a larger share of the consumer and commercial lending market.
He said that in by December 2003, the bank had completed the establishment of 10 regional loan centers nationwide to cope with rising demand for commercial and consumer loans.
"We enjoyed a 117 percent growth in lending exposure to (the two sectors) last year. As of September 2003, credits for SOEs and consumers have amounted to Rp 3.03 trillion," Armand added.
Aside from the rising demand, the bank's focus on those sectors were also attributable to the fact that they carry less risk than lending to the corporate sector.
During the past year, local banks, which have just started to recover from the devastating impact of the late 1990s financial crisis, have largely avoided lending to the corporate sector as they are deemed too risky due to the slow progress in the restructuring of bad debts owed by many companies.
Some banks have previously said that despite the possibility of social unrest during the 2004 general elections, they would continue to provide new lending during the year but focusing on the consumer and commercial or retail sector.
BII is now 51 percent controlled by a consortium led by South Korea's Kookmin Bank and Singapore government's investment arm Temasek Holdings Pte. Ltd.
Thursday's presentation disclosed that by September 2003, BII recorded a net profit of Rp 221 billion as against Rp 30 billion posted in the same period the year earlier.
It also expected to book a net profit of Rp 300 billion for the full-year 2003, more than double the figure posted in the previous year.
The bank posted Rp 132.5 billion in net profit in 2002.
BII, the former financial flagship of the now-indebted Sinar Mas Group conglomerate, currently boasts total assets of Rp 36 trillion and about 1.1 million customers.