BRI wraps up successful listing debut

BRI wraps up successful listing debut

Rendi A. Witular, The Jakarta Post, Jakarta

Shares in state-owned Bank Rakyat Indonesia (BRI) made a
fairly impressive debut on the Jakarta Stock Exchange (JSX) on
Monday, surging up 11 percent, which some say reflects investors'
strong confidence in the bank.

Investors who earlier failed to get enough of BRI shares from
the initial public offering (IPO) rushed in, pushing the price up
to its highest point in early trading at Rp 1,100, or Rp 225
higher from the opening price of Rp 875.

However, profit taking trimmed down the surge in BRI shares to
Rp 975.

"The increase in BRI shares reflects investors' confidence in
the bank at a time when confidence in the country's economy has
also started to improve," said Raden Perdede, chief economist at
Danareksa Research Institute.

Raden expected that the BRI's impressive debut could help
revive overall investor confidence in the country's banking
sector, especially in state banks, which got hit hard by the
recent revelation of a major loan scam at publicly listed Bank
Negara Indonesia (BNI).

BRI, the country's fourth largest bank in term of assets, has
mostly been involved in micro-financing, an area largely
overlooked by most banks, and it has become very profitable.

BRI's president Rudjito said in a press conference that the
bank's net profit for this year was estimated to reach at least
Rp 1.6 trillion, around 75 percent of which is expected from loan
interest revenue.

Of the bank's total Rp 43.6 trillion in outstanding loans as of
June this year, 91.62 percent were channeled to micro-, small-
and medium-sized enterprises.

Such loans have been proven to be low-risk in terms of default
rates compared to loan exposure to large corporations.

BRI offered 41 percent of its stake in the country's largest
IPO since 1995 and the largest bank share issuance in Asia,
outside of Japan, this year.

The IPO was 16 times oversubscribed, with foreign
institutional investors, from Asia, Europe and North America,
taking 54 percent of the 4.5 billion shares on offer.

Of the total Rp 4.17 trillion (US$490 million) proceeds raised
from the IPO, around Rp 2.67 trillion will help finance the 2003
state budget deficit and the remaining Rp 1.5 trillion will
increase the bank's capital base.

Rudjito said that proceeds from the IPO, along with the US$150
million subdebt bonds it recently issued, could help lift the
bank's capital adequacy ratio (CAR) to 20 percent from 12.36
percent at present.

BRI needed to maintain its CAR at the level of 20 percent in
order to expand its loans to farmers, fishermen, cattle breeders
and other small businesses.

The Jakarta Composite Index, however, fell 1.1 percent to
620.070 due largely to the negative impacts from state-owned
telecommunication firm PT Telkom (fears of losses after a new
audit) and the BNI problems. Analysts said BRI's shares saved the
index from falling further.

JSX president Erry Firmansyah said that BRI was among the five
largest counters on the JSX in terms of market capitalization,
able to move the index up by 2.5 percent with a one-point climb
in its share price.