Thu, 20 Nov 2003

BRI sees profit growing by 18-20%

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned Bank Rakyat Indonesia (BRI), the country's fourth largest bank in terms of assets, said on Wednesday that its net profit would grow by between 18 and 20 percent next year despite fears of possible unrest during the general elections.

BRI president Rudjito said the bank had considered all risks, including the elections, in the profit forecast.

"We will be less impacted by the side effects of the general elections, because most of our businesses and customers are located in villages and rural areas, while political tension usually occurs in the cities," he said at a press briefing.

BRI has estimated that its pre-tax profit would surge by 98 percent for the remainder of the year to Rp 2.9 trillion (US$341 million) on higher revenue from lending activities. Its total 2003 revenue is estimated to reach around Rp 7.5 trillion.

Rudjito said that by September, the bank's pre-tax profit had increased by 104 percent to Rp 2.70 trillion, from Rp 1.31 trillion in the same period last year. In the third quarter alone, the bank had booked Rp 935 billion.

Until September, the bank has recorded an increase in revenue from lending interest to Rp 11.16 trillion, from Rp 9.951 trillion in the same period last year.

The bank said its net interest income surged to Rp 5.74 trillion from 4.45 trillion, of which Rp 3.03 trillion was drawn from non-government recapitalization bonds.

Meanwhile, its capital adequacy ratio (CAR) had increased to 17.56 percent from 12.58 percent, and its non-performing loans stood at 3.33 percent.

BRI, the country's largest microbank, is regarded as the strongest state-owned lender by some analysts because of its focus on extending loans to small businesses and farmers.

Of Rp 45.6 trillion in outstanding loans as of September, 86.25 percent were channeled to small- and medium-sized enterprises.

The bank planned to expand its lending by up to 20 percent in 2004, said Rudjito.

Such loans have proven to carry little risk of default compared to loan exposure to large corporations, as small businesses are regarded as being more conscientious about repaying debts than large ones.

BRI currently has the highest return on equity (ROE) in the banking industry at 45.23 percent, almost twice the average return booked by other banks.

The bank's return on asset (ROA) ratio jumped to 4.04 percent in the January-September period, from 2.23 percent.

Rudjito said the bank planned to issue Rp 500 billion in subordinate debts in early December in order to increase its CAR to around 20 percent.

He explained that the bank needed to further upgrade its capital base to avoid violating the central bank's ruling, which obliges banks to have a minimum CAR of 12 percent by 2004.

The bonds will have a maturing period of five years, extendible to 10 years.

Acting as the underwriters of the issue are PT Trimegah Sekuritas, PT Danareksa Securities, and PT Andalan Artha Advisindo Sekuritas.