BNI expects Rp 1.4t loss due to program delay

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)