Jan 30, 2011

BRI plans to issue Rp3 trio sub-debt

The state-owned lender PT Bank Rakyat Indonesia Tbk (BRI) plans to issue Rp3 trillion subordinated bond this year in a bid to jack up its capital, preventing it from further decline during a credit expansion of above 20%. 
BRI Finance Director Ahmad Baiquni said the bank's capital is still adequate to underpin its credit expansion this year.
"But, if we have to reach more than 20% growth and obliged to distribute 30% dividend, we think BRI requires additional capital," he said as quoted by Bisnis Indonesia yesterday.
Adding to that, rights issue is impossible as Indonesian government, as controlling shareholder in BRI, has determined not to sell more than 40% shares to public. The government, through Ministry of State-Owned Enterprises, currently controls 57% shareholding in BRI. In return, the capital enlargement might be accomplished via tier 2 such as issuing subordinated bond. He is pessimist that BRI could launch the sub-debt in the first half of this year because it needs to audit its financial statement.
BRI President Director Sofyan Basir said the bank might reach a 15% increase in net profit last year of Rp7.31 trillion. It means BRI may post Rp8.5 trillion net profit.
Disclosure: No position at the stock mentioned above.

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