BNI to channel new loan in 2nd semester

JAKARTA (JP): The publicly listed Bank Negara Indonesia (BNI) will channel a total of Rp 2.5 trillion (US$294.12 million) in new loans in the second semester of this year, according to the state bank's corporate director Suryo Sutanto.

Suryo said here on Tuesday that 65 percent of the bank's new lending would go to the retail sector, while the remaining 35 percent would be allocated to corporate borrowers.

"We have channeled Rp 1.6 trillion in the first semester, and we'll channel another 2.5 trillion in the second semester," he said in a seminar on prudential banking.

But he didn't say how much of the new lending target for this semester had been realized.

According to Suryo, the bank was only able to start extending new loans after the government completed recapitalization of the bank in June.

Most of the country's commercial banks virtually halted new lending after their capital adequacy ratios (CAR) plunged deep into negative territory due to the financial crisis.

Although the high interest rate policy imposed by the central bank between 1998 and 1999 had boosted third party funds in most banks, the industry, due to the low CAR levels, could not resume lending until the banks had been recapitalized.

Suryo said that after the completion of the BNI recapitalization program in June, the bank's immediate focus was not only to channel new lending but also to implement various measures to meet the targets set in the bank's business plan.

Suryo said that the reduction of the bank's loan exposure to the corporate sector was part of the business plan.

He explained that before the crisis started in the middle of 1997, BNI's loan exposure to the corporate sector was more than 80 percent.

He said that increasing the loan allocation to the retail sector was been undertaken in a bid to minimize risk because this sector had proven itself to be relatively stable during the economic crisis.

Asked by one participant why many banks had not been able to provide dollar-based lending, Suryo said that the banks had to use their dollar reserves to repay debts to Bank Indonesia.

He explained that during the crisis, the central bank covered the domestic banks' foreign loans as part of the government's overall guarantee program.

He said that now was the time to pay back the central bank.

"Our focus now is to repay the central bank if we have the dollars," he said.

Meanwhile, commercial director of the publicly listed Bank Niaga, Daniel Rompas, said that his bank had also started providing new lending since its recapitalization program was completed in May.

But he said that in the medium-term, Bank Niaga was focussing on its existing customers who had proven themselves capable of weathering the country's economic crisis.

"After the recapitalization program was completed, we short- listed our good customers who have survived the crisis," he said at the same seminar. (rei)