ING Barings revises down profit estimate for BNI

ING Barings revises down profit estimate for BNI

JAKARTA (JP): ING Barings Securities has lowered its profit
estimate for publicly listed Bank Negara Indonesia for 1997 and
1998 as the rupiah upheaval continues.

The global securities company said in its latest research
report that BNI's profit estimate for 1997 was revised down to Rp
384 billion (US$134.73 million) from Rp 469 billion while that
for 1998 was lowered to Rp 423 billion from Rp 548 billion.

ING Barings said the revision was based on shrinking margins
this year and slower than anticipated loan growth.

The recent currency turmoil and the real possibility of much
lower loans growth and higher prevailing interest rates for the
rest of this year and most of 1998 would certainly affect the
bank's financial performance, it said.

ING Barings said the likelihood of the bank to hit its full
year target had already diminished.

However, interim results of the bank's net profit in the
second quarter were in line with the expectations to Rp 230
billion, slightly under 50 percent of the full year target of Rp
469 billion, it said.

BNI's second quarter interim profits implied there was no
change from the first quarter net profit result of Rp 115.5
billion.

The securities firm said the bank's loan to deposit ratio
(LDR) rose slightly to 95.9 percent from 93.9 percent at the
beginning of the year, still lower than the average 106 percent.

ING Barings said Indonesia's banking industry climate was
changing, especially with the interest rate and loan growth over
the past few months.

Barings said that instead of a further easing in interest
rates and steady loan growth, interest rates have hiked and were
unlikely to return to their previous level before July at any
stage in the near future.

ING Barings was confident lending rates would stabilize at
about 24 percent to 25 percent -- an increase of four percent to
five percent above the previous level -- and deposit rates may
increase further in coming months.

"This, as a result, will put pressure on interest margins,"
the report said.

The securities firm said its estimate for BNI, the largest
bank in the country, did not include the foreign exchange loss
incurred by the bank during the recent currency turmoil.

BNI, Barings said, helped the central bank intervene in the
foreign exchange markets recently to prevent a further attack on
the rupiah by speculators.

"This can result in significant foreign exchange loss in the
bank," ING Barings said.

The securities firm said yesterday the revision for bank BNI,
which booked a total net profit of Rp 335 billion in 1996, was
made to reflect the current less favorable climate for the
banking system in Indonesia.

BNI executives were not available for comment.(aly)