Commerce sets sights on 15% loan growth on Niaga's role

Commerce sets sights on 15% loan growth on Niaga's role

Bloomberg, Kuala Lumpur

Commerce Asset-Holding Bhd., Malaysia's second-biggest lender,
expects to expand loans by at least 15 percent this year, the
same pace as in 2004, as a bigger contribution by its Indonesian
bank unit helps cover a slowing economy at home.

Loan growth will be "quite good -- at least as good as it was
in 2004," Commerce's Executive Director Rozali Mohamed Ali said
in Kuala Lumpur on Monday after the company's annual shareholders
meeting.

"This will include Bank Niaga, where loans are growing very
fast."

PT Bank Niaga Indonesia, a unit of Commerce, expects lending
to expand by 20 percent year, with pretax profit to increase at
the same pace, Niaga's President and Chief Executive Peter Stok
said.

He didn't provide a forecast on net income.

Commerce is counting on Niaga to boost loans as low interest
rates and faster economic growth fuel demand for credit in
Indonesia, Southeast Asia's largest economy. The Indonesian
economy is forecast by the government to expand 5.5 percent in
2005, the fastest pace in nine years.

Malaysia's economy, which grew 7.1 percent last year, will
slow more than previously estimated this year as record oil
prices curb overseas demand for its exports, the Malaysian
Institute of Economic Research said on Monday.

The Kuala-Lumpur based think-tank lowered its forecast for
growth this year in Southeast Asia's third-largest economy to 5.4
percent from its January estimate of 5.7 percent. That would be
the slowest growth rate since 2003.

Niaga's loans growth target is "achievable," said Baradita
Katoppo, head of research at Kim Eng Securities in the Indonesian
capital of Jakarta.

"Last year, loans grew by 46 percent," Katoppo said. "It was
among most Indonesian banks that started from a low base; growing
loans by 15 to 20 percent is the sector average so they are at
the top end."

Katoppo said he has a 'Buy' rating on the stock as it is among
"the cheapest in the sector," trading at around 1.4 times book
value. He has a 6-month price target of 625 rupiah on the bank's
stock.

Niaga, Indonesia's ninth-largest bank, surpassed 2004 profit
targets, with net income rising 41 percent to Rp 660 billion
(US$69 million).

Commerce's profit last year fell 3.8 percent to 752.2 million
ringgit ($198 million) from a year earlier, after it reclassified
how it measures bad loans, adding to provisions, it said in
February.

The Malaysian lender, which gained control of Bank Niaga in
2002, raised its stake to 54.7 percent this month by purchasing
an additional 2.09 percent of the lender for 32.9 million
ringgit.