Lippo Bank to boost new loans this year: CEO

P.C. Naommy, The Jakarta Post, Jakarta

Lippo Bank, the country's sixth largest bank, plans to boost new lending by at least 80 percent this year, according to its president Joseph Luhukay.

"As soon as we settle all (of our) tax debts and other obligations, we will increase our loan-to-deposit ratio, which currently stands at a low rate of 22 percent," said Joseph.

He said the bank would continue to focus its lending on consumer loans and credit for small- and medium-sized enterprises.

Last year, Lippo Bank's new lending volume declined to Rp 4.8 trillion (US$571.43 million) from Rp 5 trillion in 2002.

A consortium led by Swissfirst Bank AG has been named the winning bidder for a 52 percent stake in Lippo Bank, but the foreign investor has yet to complete the necessary documents to allow the central bank to complete a crucial fit and proper test.

Lippo Bank, which concentrates its business strategy on payment services, predicts that future trends will shift from fixed-line transactions to mobile banking transactions with cellular operators on the front line.

According to Joseph, currently Lippo Bank processes no less than Rp 300 trillion in payment transactions in one month, with Rp 15 trillion of the transactions done through e-banking, and serving 400 companies.

In line with its business strategy, Lippo Bank signed a joint business agreement with three cellular operators, PT Excelcomindo Pratama, PT Telkomsel and PT Indosat for its new service called Lippo Bank Instant Refill on Tuesday.

With the new service, 2.6 million of Lippo Bank's customers will be able to add credit to their cell phones by sending a message through their cell phones.

Joseph added that the bank would boost its e-banking services rather than install more ATMs, which would cost millions of rupiah.

According to Joseph, with e-banking, the bank could save 90 U.S. cents in operational costs for every transaction done in branch offices or 9 cents for every transaction done through an ATM. He added that banking through the Internet would only cost the bank 1 cent for every transaction.

Research done by an international institution reveals that every transaction at bank branches worldwide costs $1.07, and 27 U.S. cents via ATMs, and a mere 1 U.S. cent through mobile banking.

Executive director of Indosat Hasnul suhaimi told The Jakarta Post that the company had already set up similar deals with 14 banks. Lippo was the sixth bank to engage in SMS-banking (transactions done through short messaging service).

According to Hasnul, the cooperation with the banks has contributed 60 percent to the company's total revenue. With last year's total income of Rp 8 trillion, the joint business has contributed up to Rp 5 trillion.