BNI's bad loans fall 15% in 6 months

SEMARANG, Central Java (JP): Bad loans at Bank Negara Indonesia (BNI) 1946, which plans to go public at the end of the year, have dropped to Rp 1.18 trillion (US$505 million), a 14.5 percent drop from Rp 1.39 trillion at the end of last year.

"Don't look at the absolute number but at the declining trend," the bank's commercial director, Hendrik Willem Tehabijuluw, said after a public presentation here yesterday.

Of the all the bad loans, Rp 544 billion belong to the category of problem loans, Rp 340 billion to doubtful loans, and the remaining Rp 297 billion have turned sour.

"What is certain is that we will be able to manage our bad loans. Our bad loans represent 5.7 percent of our total credits, which is better than the banking industry average," Hendrik said.

Hendrik said that BNI has adopted an "S-3" strategy to deal with the bad loan problem through restructuring, reconditioning and rescheduling the bad loans.

The bank is also making an effort to prevent the emergence of new problem loans by training its employees, especially those involved in extending credit.

The presentation, led by the bank's president, Widigdo Sukarman, was attended by some 500 prospective investors.

Widigdo said after the presentation that he is optimistic prospective investors will hold their BNI shares for at least one month, prior to the distribution of dividends scheduled for January -- one month after the planned initial public offering of the BNI shares.

"BNI will sell its shares in December so that investors will be able to enjoy dividends in a one-month period," Widigdo told journalists.

He said the timing serves as a special incentive for investors to subscribe to BNI shares and will allow the bank to net as many retail investors as possible.

Meanwhile, Agus Projosasmito, president of state-owned PT Danareksa Sekuritas -- the lead underwriter of BNI's initial public offering -- is upbeat that domestic investors will be able to absorb 51 percent of the total offered shares worth Rp 1.085 trillion.

Half of the 51 percent of the total shares allocated for the domestic market are fixed for institutional investors.

Agus acknowledged that the current domestic political situation is not really supportive of BNI's going public plans, given the July 27 rioting in the capital that claimed a number of casualties.

"It is true that one month after the July 27 incident our capital market suffered a net-buying condition, but now the condition is the other way round and in a net-buying situation," Agus said. (har/rid)