BANKING - BNI’s 60% Earnings Jump Lifts Share Sale Prospects

Jakarta. State-owned Negara Indonesia saw its earnings jump 60 percent in the third quarter, with results boosted by rising interest income and strong performance from its Shariah unit, president director Gatot Suwondo said on Friday.
“We’re consistent in our strategy of focusing loans to the infrastructure sector, resulting in the 60 percent increase in profit this quarter,” Gatot said on Friday. BNI, Indonesia’s fourth-largest lender, has plans to lend more than Rp 20 trillion ($2.2 billion) to infrastructure projects this year.

In a statement, the bank said profit had risen to Rp 2.96 trillion ($331.5 million), from Rp 1.85 trillion in the year-earlier period. Net interest income increased to Rp 8.6 trillion in the third quarter, up from Rp 8.09 trillion last year, and its Shariah unit recorded Rp 391.21 billion in income, from Rp 219.65 billion over the same period last year.

Gatot added that the bank had also reduced its asset and liability costs.

BNI’s also announced that its total assets increased to Rp 224.81 trillion in the third quarter, up from Rp 203 trillion in the year-earlier period.

The financial report also paves the way for BNI to carry out its planned Rp 7 trillion rights issue in December. Under a deadline set by the State Enterprises Ministry, BNI was required to publish the report by Friday, or else the rights issue would’ve been postponed until next year.

“We’re very optimistic that BNI will have a successful rights issue this year,” Gatot said.

BNI is looking to sell 3.37 million new shares in the sale, equivalent to 16 percent of its total enlarged capital.

Juniman, chief economist at Bank Internasional Indonesia, said BNI’s jump in profit would impress investors ahead of the bank’s rights issue, but he warned investors about the main factor behind BNI’s strong performance.

“We can see that BNI’s net interest income increased slightly, but the main factor behind BNI’s profit this quarter was the decrease in its non-performing loans, which amounted to around Rp 1 trillion,” he said. “BNI needs to show a significant effort to boost its operating income in the fourth quarter. Relying on decreasing NPL to boost profit would provide a limited amount of profit.”

BNI’s net NPL ratio dropped to .74 percent, down from 1.9 percent during the third quarter last year.

“But the bottom line for investors is net profit, and BNI has shown a significant increase. So I think their rights issue will do well,” Juniman said

BNI is planning the rights issue in order to maintain a capital adequacy ratio of 15 percent while increasing loans by 15 to 18 percent this year. BNI’s CAR is 13 percent, against the central bank’s minimum of 8 percent.

 Source : http://www.thejakartaglobe.com/business/bnis-60-earnings-jump-lifts-share-sale-prospects/401600 - Oct 15, 2010