BTN lacks long-term financing

BTN lacks long-term financing

JAKARTA (JP): Bank Tabungan Negara (BTN), the state-owned bank
specializing in housing credits, lacks long-term sources of
financing to back up its lending activities.

BTN's president, Widigdo Sukarman, said yesterday that the
lack of long-term financing sources often hamper the bank's
expansion programs as most of its funds are raised from short-
term time deposits.

BTN, which allocates nearly 90 percent of its lending
portfolio to housing loans, also faces problems in cutting its
high operation costs, he told the House of Representatives in a
hearing.

"Our overhead costs are much higher than those of commercial
banks as most of the loans are directed to the retail market,"
said Widigdo, who was appointed BTN president early last year,
replacing Sjahrizal, who is now serving a jail term for his role
in the loan fraud at Bank Pembangunan Indonesia.

As of last year, BTN booked total assets of Rp 6.86 trillion
(US$3.2 billion) and outstanding loans of around Rp 4.84
trillion, while its after-tax profit was recorded at Rp 72.69
billion for the year. The bank's capital adequacy ratio was
around 33.8 percent, far higher than the minimum standard of nine
percent imposed on domestic banks.

Widigdo said that BTN would not raise the interest rate on its
lending despite the upward trend in the domestic interest rates.

"It would take time for BTN to adjust its lending rates," he
said.

The annual interest rates of BTN's housing credits are set at
8.5 percent for the purchase of houses measuring a maximum of 21
square meters, 11 percent for houses more than 21 square meters
to 70 square meters and 17.5 percent for houses of above 70
square meters. (hen)