Indovest Bank's bad investments cost it Rp 1b
Indovest Bank's bad investments cost it Rp 1b
JAKARTA (JP): Indovest Bank, a joint venture bank listed on
the Jakarta and Surabaya stock exchanges, suffered a financial
loss of Rp 1.08 billion (US$502,793) from its securities trading
on the capital market last year.
Gatot Budiarto, a director of the bank, said the loss was
incurred due to more than a 50 percent drop in the prices of
shares bought during the capital market's boom in early 1990.
He refused to disclose the amount of shares sold but said that
all the bank's equity investment in the capital market had been
dumped in order to comply with the central bank's regulation,
which restricts banks from being engaged in securities trading.
Indovest, which used to operate as a non-banking financial
institution, started to operate as a commercial bank early last
year to adjust to the new banking law.
BDN owns a 51-percent stake in Indovest, Mitsubishi Bank Ltd
of Japan 18.14 percent, Nikko Securities Co. Ltd of Japan 17.43
percent and private investors another 13.43 percent.
However Gatot said that Indovest made a profit despite the
loss from the sales of its stocks.
The bank's after-tax profit rose by almost 70 percent to Rp
7.46 billion last year from Rp 4.4 billion in 1992. Its total
assets also significantly increased to Rp 366.34 billion from Rp
307 billion.
Margin
"The significant increase in the net income was possible due
to the high margin of the bank's interests," he told newsman
following the bank's annual shareholders' meeting.
Gatot said, however, that profit growth is likely to decline
this year due the tighter competition. "The interest rates both
for deposits and lending are more stable at present and it will
therefore be difficult to maintain the high margin," he said.
He said Indovest still relies on its old clients despite the
change in its status to a commercial bank and acknowledged that
it has yet to become a "real bank".
Gatot said the bank does not have a branch and that its loan
to deposit ratio (LDR) of 171 percent is still far higher than
the maximum level of 110 percent required by the central bank.
Shareholders approved the bank's proposal to pay a cash
dividend of Rp 75 per share during yesterday's annual
meeting.(hen)