BNI sees net profit jump to Rp 3t next year

Rendi A. Witular, The Jakarta Post, Jakarta

Troubled state-owned Bank Negara Indonesia (BNI) projected a net profit of around Rp 3 trillion (US$352 million) and a lending growth of between 27 percent and 36 percent next year, despite a tougher business environment, a senior official said.

The newly elected BNI president, Sigit Pramono, said the higher lending volume should provide the bank with a higher interest revenue.

"The general elections next year will overshadow business activities, but we are optimistic that the bank's net profit target of Rp 3 trillion could be met," said Sigit on Tuesday.

He explained that for the first semester of 2004, businessmen would have a tendency to halt activities because of the general elections, but in the second semester they would race to develop their businesses and seek new bank loans.

BNI, the country's second largest bank in terms of assets, previously said its 2003 net profit was estimated to reach Rp 1.6 trillion, down from Rp 2.51 trillion last year due to potential losses from the high-profile Rp 1.7 trillion lending fraud.

The management has decided to set aside a huge loan-loss provision of about Rp 1.3 trillion against potential losses from the scandal.

The bank had initially targeted a Rp 3 trillion net profit this year.

In regards loans, Sigit said: "Next year will be a tough year for us. But we remain committed to allocate between Rp 12-16 trillion of lending next year, in order to boost our revenue from loan interest."

BNI's outstanding loans this year are estimated to reach Rp 44 trillion.

Sigit said the expansion in lending was also aimed at reducing the bank's dependency on revenue from the government's recapitalization bonds.

Around 40 percent of BNI's revenue this year will come from recap bonds, which totals Rp 46 trillion as of last year.

Sigit also said that between January and March, BNI management would focus more on investigating the lending fraud, recovering losses, and restoring public trust in the bank.

From April to June, the management plans to focus on strengthening the internal supervision of the bank by launching a "zero fraud operation" campaign and restoring the bank's net profit.

Sigit said the management would try to realize a rebranding measure in July to rebuild the bank's image after the revelation of the massive lending fraud.

Included in the rebranding strategy was a possible change in the bank's logo, he said.

BNI's logo depicts a traditional Indonesian sailing vessel.