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.