BNI pursues Rp 4 trillion acquisition plan

BANK - JAKARTA. State-owned lender Bank Negara Indonesia (BNI) is planning to acquire several small banks and a general insurance company to strengthen its business this year.

BNI deputy president director Herry Sidharta said negotiations were underway on the planned acquisitions, which could require up to Rp 4 trillion (US$282.66 million) in capital.

“We are still evaluating the prospective banks for acquisition [on] whether they align with BNI’s core business,” Herry said on Wednesday during a press conference at the BNI head office.

Acquiring the general insurance company was intended to strengthen BNI's insurance subsidiary, BNI Life Insurance, which provides life, health and education insurance policies.

BNI Life performed below expectation last year due to poor operatonal performance and insignificant investment returns from the capital market, said Herry.

Last year was a rough year for the Jakarta Composite Index (JCI) because of mounting external pressures like the US-China trade war. The JCI ended 2018 in the red, falling 2.54 percent overall.

In addition to its acquisition plan, BNI was also considering the establishment of new subsidiaries that would engage in the venture capital and financial technology (fintech) sectors.

The lender owns four subsidiaries in addition to BNI Life – BNI Syariah, BNI Securities, BNI Multifinance and BNI Asset Management – which together contributed 9.24 percent to its consolidated profit in 2018.

BNI posted Rp 15.02 trillion in net profits last year, a 10.3 percent year-on-year (yoy) increase that it attributed to a steady increase in net interest income, stronger loan growth and improvements in efficiency and assets quality.

BNI’s 2018 net profit was buoyed by its net interest income, which recorded an 11 percent yoy increase to Rp 35.45 trillion. Its net profit also increased on the back of 5.2 percent growth in its non-interest income to Rp 11.61 trillion.

BNI’s improved asset quality also contributed to its increased net profit, as seen in the decline in its gross non-performing loan (NPL) ratio from 2.3 percent to 1.9 percent by the end of 2018.

However, BNI’s net profit growth slowed last year compared to 2017, when net profit grew 20.10 percent.

Nevertheless, the lender recorded an improvement in operational efficiency last year, as reflected in its cost-to-income ratio (CIR) which declined from 43.9 percent in December 2017 to 42.5 percent in December 2018.

BNI’s total outstanding loans increased 16.2 percent from Rp 441 trillion in 2017 to Rp 512 trillion in 2018, boosted primarily by loan disbursements to state-owned enterprises and private companies.

Meanwhile, its total assets exceeded the Rp 800 trillion mark for the first time in 2018, growing 14 percent to reach Rp 808.6 trillion in December.

Finance director Anggoro Eko Cahyo said BNI would push for growth in consumer loans, including payroll loans, housing loans and credit card subscriptions to maintain high growth in total lending this year.