Slower growth at Lippobank

Slower growth at Lippobank

JAKARTA (JP): Lippobank, the publicly-listed bank controlled
by the Lippo Group, expects slower growth both in their lending
portfolio and in earnings this year due to a tighter money
supply.

Eddy Handoko, the bank's vice president, said yesterday that
the lending growth rate is projected to decline to 15 percent
from nearly 55 percent in 1994.

"We have to reduce the lending growth rate to maintain the
bank's financial solvency," he said after the bank's annual
shareholder meeting.

Eddy acknowledged that a major cut in Lippobank's lending
portfolio would automatically affect earnings, but said that the
impact would still be within acceptable levels.

"The growth in profits will still be within the 15 percent to
20 percent level," he said.

Lippobank, nearly 50 percent owned by the investing public on
the Jakarta and Surabaya stock exchanges, booked a 41 percent
growth in assets last year to Rp 6.91 trillion (around US$3
billion) and a 54 percent in lending to Rp 5.2 trillion, while
net profits rose by 54.7 percent to Rp 65.62 billion. Earnings
per share, however, dropped to Rp 229.72 from Rp 237.66 due to an
increase in the number of shares issued in December last year.

Eddy said that lower growth in lending rate did not affect the
bank's earnings in the first quarter of this year, which still
rose by around 19.3 percent to Rp 21.5 billion as compared to Rp
18 billion in the fourth quarter of last year.

Lending, however, changed only slightly, rising 3.8 percent in
the first quarter to Rp 5.41 trillion from Rp 5.21 trillion at
the end of 1994.

Bank Indonesia, the central bank, raised early this month the
discount rates of its money market securities (SBPUs) by a half
percentage point to curb mounting inflationary pressures.

The rise in the discount rates, the third since January,
caused a rise in the deposit rates by an average of one
percentage point to between 16 percent and 18 percent per annum.
The rise also pushed up the annual lending rate to between 21
percent and 25 percent.

Eddy said that the present tight money situation is still much
better than it was in 1990s because the impact of tight liquidity
has been less strong.

"As long as economic growth can be maintained at around seven
percent, the prospects of the country's banking industry will
still be encouraging," he said.

Yesterday's shareholders' meeting approved the management's
proposal to distribute a cash dividend of Rp 50 per share to its
shareholders. The dividend payout ratio will be 22.17 percent of
the total net earnings.(hen)