BNI's bad loans fall 15% in 6 months

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)