BRI sees profit growing by 18-20%

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.