BNI expects Rp 1.4t loss due to program delay

JAKARTA (JP): Listed state Bank Negara Indonesia (BNI) said on Monday it expected to book a Rp 1.4 trillion loss this year due to a delay in the commencement of the bank's recapitalization program.

BNI president Saefudin Hasan said the estimated loss in 2000 would be attributed to the bank's lingering negative spread caused by the bank's recapitalization program delay, from an initially scheduled September 1999 date to June 2000.

Negative spreads occur when a bank's interest expense is greater than its interest income.

"According to the business plan BNI will still book a loss of Rp 1.4 trillion in 2000. But for 2001 and 2002, profits are forecast at about Rp 1.9 trillion and Rp 2.6 trillion, respectively," he said.

Following the fallout of the economic crisis which first hit the country in mid-1997, the government launched a bank recapitalization program to bail out the failing domestic banking sector.

A bank under the recapitalization program has its bad debts removed from its balance sheet and in return receives assets in the form of government bonds.

"We will have a positive spread after the recapitalization program, but that still won't cover the loss which occurred in the first six months of the year," said Saefudin after an extraordinary shareholders meeting of the bank.

During the January to March period, BNI booked a Rp 1.3 trillion loss. Its nonperforming debts stood at 52 percent of its total loans as of the end of March, according to Saefudin.

Saefudin stressed that the positive income forecast following the bank's recapitalization was based on the fact that the bank would get bond interest income and additional income from the would-be completed debt restructuring program of its debtors.

BNI, according to Saefudin, channeled Rp 900 billion in new credits during the first five months of the year.(udi)