BRI slashes bad loans worth over Rp 1 trillion
BRI slashes bad loans worth over Rp 1 trillion
JAKARTA (JP): The state-owned Bank Rakyat Indonesia (BRI) has
written off more than Rp 1 trillion (US$435 million) in bad loans
from its balance sheet, according to the bank's top official.
BRI president Djokosantoso said yesterday that the writeoff of
the bad loans was an important measure in improving the bank's
financial performance.
"The move is also part of the bank's preparations to go
public, possibly in 1998," he told newsmen at a ceremony for the
signing of a cooperation agreement between the bank and the
Islamic University of Indonesia.
He said that the removal of the bad credits reduced the total
number of the bank's bad (totally unpaid) loans to 3 percent of
its total outstanding loans, from 6 percent previously.
Djoko said that problem loans at the bank amount to 12.7
percent of its total current outstanding loans of Rp 22 trillion.
BRI's announcement about the write-off of its bad loans was
the first made by a state-owned bank. State banks have been
suffering a flat growth in their lending for the last three years
owing to the impact of the high value of their bad loans.
According to Bank Indonesia, non-performing loans dropped to
10.4 percent in December, last year, from 12.1 percent in the
same month of 1994. The portion of the bad (totally unpaid) debts
also dropped to 3.3 percent from 4 percent in the same period.
Writing off loans is an accounting process whereby a loan
determined to be a worthless asset is removed from the books as
an earning asset and charged to the loan loss reserve.
He said that BRI would continue to seek the repayment of the
loans despite their removal from the balance sheet.
In 1995, BRI booked a 74 percent increase in its consolidated
pre-tax profits to Rp 255.25 billion (US$111 million) from Rp
147.17 billion in the previous year.
The bank's revenues from interest fees increased by 25 percent
to Rp 1.55 trillion last year from Rp 1.35 trillion the previous
year.
The bank's consolidated assets, which totaled Rp 25.9 trillion
as of 1994, rose by 10 percent to Rp 28.56 trillion last
December.(hen)