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)