BNI president upbeat about share offering
BNI president upbeat about share offering
JAKARTA (JP): The president of state-owned Bank Negara
Indonesia (BNI) 1946, Widigdo Sukarman, said yesterday he was
confident the bank's initial public offering (IPO) in November
would be well received by investors despite the large number of
shares it had to sell.
Widigdo said the bank, which started a "roadshow" promotion
campaign here yesterday, would take the IPO roadshow to six other
cities in Indonesia and to major financial centers in Japan,
Europe and the United States to attract investors.
"We are confident that foreign and domestic investors will
respond positively. The potential demand for BNI shares is quite
good," he told reporters after launching the bank's roadshow
program, which is to end on Oct. 24.
He said the bank, the country's largest commercial bank, would
sell 1.08 billion new shares, or around 25 percent of its
enlarged capital.
The share prices, each with a face value of Rp 500 (20 U.S.
cents), are to be determined at the end of the roadshow. The
shares are to be sold to the public during the primary offering
period between Nov. 6 and Nov. 29.
Widigdo hinted that the price of the bank's shares would be
set at a reasonable level even though the potential demand for
the shares was promising.
"The bank's IPO is merely based on business factors so that we
will make a success not only on the primary market but also on
the secondary market," he said in an indirect reference to the
decline of a number of listed companies' share prices to below
their IPO prices.
He said the proceeds from the IPO would be used to boost its
capital and strengthen its short-term and long-term finance.
Assets
BNI's total assets were valued at Rp 32.35 trillion ($13.7
billion) on June 30 this year, with deposits amounting to Rp
17.90 trillion and loans to Rp 20.44 trillion.
Its pretax profit totaled Rp 198.6 billion in the first
semester of this year, or more than half of last year's pretax
profit of Rp 378.7 billion.
David Chang, the research division director of securities
company PT Vickers Ballas Tamara, said the bank, which had the
widest national network, with over 489 branches throughout the
country and six overseas branches, was projected to sell its
shares at a price which offered a price earning ratio between
eight and 10 times of its 1997 profit. On the Jakarta Stock
Exchange, the banking sector's price earning ratio is generally
eight times its 1997 profits.
"If the bank offered (the shares) at a discount, the issue is
likely to be successful because it deserves a premium over the
banking sector, given its sovereignty," he told The Jakarta Post.
The bank is expected to raise around Rp 1 trillion from the
IPO, allowing it to strengthen its capital and improve its
capital adequacy ratio from its current level of 9.1 percent to
about 12 percent, he said.
Chang said the bank, which is expected to maintain its loan to
deposit ratio at around 85 percent to 90 percent, would generate
sufficient funds from the IPO to support its growth over the next
three to four years.
He projected that BNI would maintain its credit expansion rate
at about 17 percent a year for the next few years in conformity
with the central bank's low loan expansion target.
BNI's net interest margin is likely to remain at 3.5 percent
in 1997 as it compensates for the rise in its reserve requirement
from 3 percent to 5 percent next April, he said.
On funding, Chang said the bank had an advantage over its
competitors in strengthening its retail market, given its large
branch network and its low sovereign risk. (hen)