BNI emphasizes its retail services

BNI emphasizes its retail services

JAKARTA (JP): State-owned Bank Negara Indonesia (BNI) 1946 is
putting more emphasis on retail services as part of a strategy to
maintain its leading role in the country's banking industry, the
bank's president, Widigdo Sukarman, said yesterday.

Widigdo said that lending to retail borrowers would be
gradually increased so that its portion to the total lending
could be raised to 50 percent in the next three years.

Lending to corporate borrowers, which at present accounts for
around 65 percent of the bank's total loans, would be
consequently reduced to allow an increase in lending to the
retail sector, he said.

"We hope the ratio of the lending to corporate and retail
borrowers would reach an equilibrium of 50-50 before we enter the
year 2000," he said at a press briefing held to announce the
bank's activities in celebrating its 50th anniversary today.

He said that expansion of the retail services is one of the
bank's important strategies in maintaining its dominance in the
lending market.

Many large companies have turned to the capital market in
seeking investment funds either through share offering or bond
issuance, he said. He added that the trend would continue in line
with the improvement in the efficiency of the country's capital
market activities.

"The growing capital market would mean more competition. We
will not only compete with other banks, but also with the capital
market," he said. He acknowledged that providing loans to retail
borrowers, comprising mostly of small and medium-scale companies,
is not only more costly but also more risky.

Promising

"Overall, the retail sector is much more promising, given the
rapid growth in the country's small and medium-scale companies,"
he said. "Furthermore, we have improved not only the system, but
also the supervision to reduce the risk."

Widigdo said that the bank, which would float its shares on
the domestic stock exchange later this year, is also improving
the quality of its human resources so that the it's staff would
have better skills both in cost-efficiency and in credit
valuation.

"Around 300 of BNI's staff members are studying overseas at
present," he said of the bank's human resource development.

BNI, which was established on July 5, 1946, is now the largest
bank in the country. The bank booked total assets of Rp 31.81
trillion (US$13.83 billion) as of March this year, with
outstanding loans amounting to Rp 20.70 trillion and deposits
reaching Rp 18.01 trillion.

The pretax profits in the January-March period totaled Rp
112.6 billion. The amount of problem loans was much higher,
reaching around 4 percent of the outstanding loans in the same
period, with bad (totally unpaid) loans at 0.58 percent.

At present, the bank operates 485 branches, mostly in Java,
Sumatra and Bali. In addition, 300 automated teller machines in
Jakarta and other major cities in Java are also boosting its
domestic networks.

The bank's pretax profit, which rose by 26.1 percent to Rp
410.1 billion in 1995, is projected to reach Rp 445 billion this
year.

Widigdo said that this year's assets and lending are expected
to respectively increase by 12.8 percent and 17 percent this
year. (hen)