State banks cut lending despite excess funds

JAKARTA (JP): The country's six state banks significantly reduced their lending activities in the first semester of this year amid growing public scrutiny of their bad loan problems.

A Bank Indonesia report shows that their lending portfolios increased only by three percent to Rp 73.98 trillion (US$35.22 million) as of May from Rp 71.76 billion as of last December.

In contrast, private commercial banks recorded a 15 percent increase in the same period.

State bank lending accounts for around 45 percent of total banking credit.

Banking analysts attributed the slow lending expansion of the state banks to their stricter loan policies.

Winarto Sumarno, the president of Bank Negara Indonesia (BNI), acknowledged that state banks were mostly in excess of funds. He said the slow lending growth was the direct consequence of the state banks' stricter policies in managing their credit portfolios.

He denied that the slow lending expansion was caused by the uproar over the bad debt problems, which have hurt a number of state banks in the past two years.

Bank Indonesia, the central bank, reports that the non- performing loans (including bad and doubtful loans) of state banks reached a total of Rp 14.97 trillion ($7.12 billion) as of October last year. This accounts for 21 percent of their total outstanding loans.

Settlements

He also said that the excess of funds was not due to "cash debt settlements".

Winarto acknowledged that many big borrowers had settled their loans earlier than their maturity periods, but said that "this cash payment" did not cause a problem for bank liquidity.

Many prime lenders, including Gemala Group and Indah Kiat, were reported to have settled their loans of around US$300 million and $500 million, respectively, with Bank Bumi Daya (BBD) and Bank Rakyat Indonesia (BRI), much earlier than their maturity periods required.

Winarto said that in terms of annual figures, the loan expansion of state-owned banks was not too low even though the growth was still lower than the 20 percent increase projected by the government.

According to their published half-yearly reports, BNI recorded an increase of 12.45 percent in its lending to Rp 18.45 trillion ($8.78 billion) as of June this year from Rp 16.41 trillion as of June of 1993. Bank Dagang Negara (BDN) booked an increase of 19.42 percent, Bank Tabungan Negara (BTN) 56.18 percent, Bank Pembangunan Indonesia (Bapindo) 56.45 percent, Bank Ekspor Impor 7.77 percent and Bank Bumi Daya (BBD) 2.27 percent, while the previously most aggressive Bank Rakyat Indonesia (BRI) recorded a drop of 1.25 percent.

BTN was the most profitable during the first semester, with its profits rising by around 326 percent to Rp 78.23 billion, while BNI's profits increased only by around 7.31 percent to Rp 155.40 billion.

BDN recorded a 26.33 percent increase in profits to Rp 113.47 billion, BRI 78.9 percent to Rp 81.45 billion, BBD 2.84 percent to Rp 72.16 billion and Bank Ekspor Impor 22.64 percent to Rp 92.72 billion, while the debt-ridden Bapindo posted a 73.51 percent decline in profit to Rp 8.9 billion. (hen)