ASEAN KEY DESTINATIONS
BII to disburse $300 million loans in second half
Private lender Bank Internasional Indonesia (BII), part of Malaysia’s financial services group Maybank , is seeking to disburse at least US$300 million worth of loans in the second half of this year to various corporate clients.
BII global banking director Eri Budiono told The Jakarta Post that talks regarding the loans were almost finalized and that the bank was looking to finalize the deals in the coming weeks.
“There are several projects in our pipeline that are related to various sectors, such as plantations and energy. One deal that we are closing very soon is acquisition financing in the plantation sector,” he said on Wednesday.
The loans will be disbursed in both US dollars and rupiah, depending on customer needs.
“Some of the funds will be provided as refinancing loans, while the others as working capital loans. We will also partner with other banks to offer syndicated loans,” Eri said.
However, Eri acknowledged that the overall loan growth in BII’s global banking segment had not been as robust as in previous years, citing the current economic slowdown that has affected its clients.
“We may not reach this year’s growth target of around 30 percent because the situation is still vulnerable for businesses. So what some of the customers do now is just repay their debts, without venturing into significant expansion projects,” he said.
A 30 percent growth target would put BII’s global banking figure at Rp 31.2 trillion ($2.33 billion) by the year’s end. However, data from the bank revealed that its global banking portfolio had continued to decline since last year.
In December, outstanding loans stood at Rp 24 trillion, but by the first half of this year, it had already fallen to around Rp 21 trillion. When compared to June 2014, the latest figure had suffered from a 28.6 percent annual decline.
Global banking, according to its financial report, made up around 20 percent of BII’s total loans.
Eri said that it would stick to its current strategy and try to improve the loan quality in its global banking segment.
Last year, declining quality in this segment, especially related to structured trade and commodity financing, led to BII posting an increase in its non-performing loans that chipped away its profitability.
Part of the strategy includes business re-profiling, through which the bank shifts its focus to state-owned enterprises and top-tier firms only in contrast to other regular companies.
Similar to other banks, Eri said that BII expected to see numerous government-backed infrastructure projects to begin rolling out, reiterating his conviction that they would help jump-start the economy.
“It’s really government spending that will run the economy in the second half of this year. We’d like to participate in the projects as well. We are particularly interested in the energy sector with the PPA [power purchase agreement] scheme as well as toll road projects,” he added.
Meanwhile, BII finance director Thilagavathy Nadason said that the bank might only post between a 10 and 12 percent surge in its overall lending in 2015 due to lackluster economic growth.
By setting the target at 10 to 12 percent, total lending is estimated to reach Rp 116.93 trillion to Rp 119.06 trillion.
“We are not aggressive in pursuing loans this year because demand for credit has not improved. For us, the growth driver for business will still come from SME [small and medium enterprise] and consumer segments,” she said.
According to its financial report, the SME and corporate segments constitute an equal part of the total loans as each accounts for around 40 percent.
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