BNI's profit plunges 83% on loan scam
BNI's profit plunges 83% on loan scam
Rendi A. Witular
The Jakarta Post
Jakarta
The audited net profit of state-owned Bank Negara Indonesia
(BNI), the country's second largest bank in terms of assets,
dropped by 83 percent last year after it was hit by a high-
profile loan scandal.
BNI president Sigit Pramono said net profit fell to a mere Rp
420 billion (US$49.4 million) from Rp 2.51 trillion in 2002, as
the management decided to set aside a huge provision against
potential losses from the scandal in mid-2003.
"The decline in our net profit is mostly attributable to the
graft case," said Sigit at a press briefing on Tuesday.
He said the bank had set aside Rp 1.3 trillion to cover any
losses. The loan-loss provision makes up 65 percent of the Rp 2
trillion the bank spent to cover other losses last year.
Sigit also attributed the decline in profit on the bank's move
to set aside around Rp 420 billion to cover losses after it
underwent a quasi-reorganization.
A quasi-reorganization is a financial engineering tool used to
correct a company's balance sheet by reevaluating its assets
based on current value.
Sigit said the bank planned to launch an aggressive loan
channeling program as part of its efforts to improve performance.
The bank has targeted a net profit of Rp 3 trillion this year.
BNI has decided to expand new lending to Rp 16 trillion this
year, or 86 percent higher than in 2002.
Of the new lending, 43 percent, or Rp 6.9 trillion, would be
channeled to the corporate sector; 37 percent, or Rp 6 trillion,
to small- and medium-scale enterprises; and the remaining 20
percent, or Rp 3.1 trillion, to the consumer sector.
Third-party funds gathered by the bank last year amounted to
Rp 105.1 trillion, up from Rp 96.7 trillion in 2002.
BNI also reported that net interest revenue, interest earned
from borrowers after deducting interest paid to depositors,
jumped to Rp 5 trillion last year from Rp 4.12 trillion in 2002
due to an increase in lending.
The bank's capital adequacy ratio (CAR) also surged to 18.17
percent from Rp 15.94 percent, higher than the minimum CAR of 8
percent set by the central bank.
BNI plans to sell more of its shares to the public via a
secondary public offering scheme, and both new and existing
government shares will be offered in the sale.
The offering is slated for August or September.
The publicly listed bank plans to sell more of its shares to
the public via a secondary public offering scheme, and will
consist of both new shares and existing ones held by the
government as the controller of the bank.
The offering is slated to take place in August or September
this year.
BNI shares on the Jakarta Stock Exchange ended unchanged at Rp
1,150 on Wednesday's trading.