Bank Mandiri, BNI Expect Recovery of Indonesia's Bad Debts to Swell Profits
April 02 2010
By : Ardian Wibisono, Jakarta Globe
State-owned banks PT Bank Negara Indonesia and PT Bank Mandiri hope to boost net profits this year as they recover bad assets.
The banks, two of the country’s biggest, said the improving economy had paved the way for a rebound in the quality and prices of the assets.
Bien Subiantoro, a BNI director, said on Thursday that net profit was forecast to double from last year’s Rp 2.48 trillion ($272.8 million), helped by asset recoveries of more than Rp 150 billion.
“The recovery from Bank Indover [Indonesische Overzeese Bank] could be included in this year’s bottom line and we have other recoveries from our foreign securities holdings [worth] around Rp 30 billion,” Bien told reporters on Thursday.
“Lots of our securities holdings defaulted during the crisis, but now they can be recovered since the economy has improved.”
Netherlands-based Bank Indover is a Bank Indonesia subsidiary which was closed during the global financial crisis in 2008. Several local banks hold debt issued by Indover and have begun to recover some of it this year. Bien said BNI had recovered 10.1 million euro ($13.5 million) from previously reported total holdings of $27 million.
Bank Mandiri president director Agus Martowardojo said earlier this week that the lender was also expecting to receive extraordinary income from selling various equity stakes and liquidating bad debtors’ assets.
Earlier this month, Mandiri recovered 17.5 million euro from the total of $32 million it had lent to Indover.
“We hope to earn around Rp 1 trillion from PT Garuda Indonesia’s IPO and if we manage to complete the sale of PT Domba Mas’s assets it will also add to our bottom line,” Agus said. “We are also in the process of selling other bad debtors’ assets.”
Last year, the country’s largest lender booked Rp 7.2 trillion of net profit supported by strong loan growth.
Minister of State-Owned Enterprises Mustafa Abubakar said late on Wednesday that the ministry targeted Rp 9 trillion to Rp 10 trillion of net profit for Bank Mandiri this year.