Maybank price tag for BII 'reasonable'

The Jakarta Post ,  Jakarta   |  Fri, 03/28/2008 1:39 AM  |  Business

As the Indonesian economy is expected to expand, the recent plan by Malaysian Banking Bhd. (Maybank) to take over Bank Internasional Indonesia (BII) at a hefty price is deemed reasonable, BII president director says.

Henri Ho said Thursday that Indonesia's highly promising economy was among one of the reasons driving Maybank to offer a startling price to acquire the bank, whereas cynical analysts believe the offer is "a bit overvalued".

"The price reflects the huge economic potential Indonesia has for the future. So it is a reasonable price," he said, adding should the deal be made, Maybank could expand its sharia business in Indonesia.

Having strong expertise in sharia businesses, Maybank controls around 60 percent of the sharia market in Malaysia.

BII deputy president director Sukatmo Padmosukarso said the offer was in accordance with a lot of predictions made by international investors who were upbeat Indonesia's economy would be eight times bigger than Malaysia's in 2015.

Maybank announced Wednesday it had beaten Bank of China to buy a 56 percent stake in BII owned by a group led by Singaporean investment giant Temasek Holding for US$1.5 billion, and another $1.2 billion for the remaining 44 percent stake.

The offer is about 4.7 times the book value of BII, which is the country's sixth largest bank with assets worth Rp 55.14 trillion ($5.9 billion).

The Temasek-led shareholders of BII have to unload their shares in response to the central bank's so-called single presence policy, which will prohibit entities from controlling more than one Indonesian bank by 2010.

Temasek already has controlling shares in Bank Danamon, the country's fifth largest bank.

BII reported Thursday its last year's net profit dropped for a third consecutive year by 36 percent to Rp 404.75 billion from Rp 633.71 billion in 2006. In 2005, its net profit was Rp 725.77 billion, down from Rp 821.5 billion in 2004.

According to the bank's financial report, the decline was primarily attributable to an increase in the provision of non-performing loans (NPL) in its financing unit, WOM Finance, which mostly channeled loans for buying motorcycles.

The bank recorded an interest income of Rp 5.54 trillion last year, down from Rp 6.20 trillion in 2006.

The total loans channeled by the Jakarta-based bank rose to Rp 33 trillion last year from Rp 26.3 trillion in 2006.

The bank's gross NPL improved to 2.91 percent from 5.02 percent.

The BII shareholders meeting approved Thursday a dividend payment of Rp 202.3 billion, down by 19.78 percent from Rp 252.3 billion. (uwi)

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