Indover eyes more profit as RI exporters expand to Europe

Rendi Akhmad Witular ,  The Jakarta Post ,  Jakarta   |  Fri, 08/15/2008 10:56 AM  |  Business

Netherlands-based N.V. De Indonesische Overzeese Bank (Indover Bank), owned by Bank Indonesia (BI), is targeting net profits of at least 3 million euros this year on the back of robust demand for export finance.

Indover managing director Chairy Hakim told The Jakarta Post recently the demand was largely being caused by Indonesian commodity exporters seeking to expand into the European and Asian markets.

"Most Indonesian companies seeking finance are those engaged in the export of coal, crude palm oil, nickel, rubber, coffee or cocoa.

"We are helping them, by providing access and financial certainty for new markets in Europe," Chairy said.

Indover helps Indonesian exporters by paying for their goods in advance, thus helping them bypass the long delivery and banking processes.

Last year, Indover (with branches in Amsterdam, Hamburg, Hong Kong, and Singapore) posted profits of 2.3 million euros after booking losses for three years in a row.

In the first half of this year, the bank had already recorded 1.3 million euros in net profits, with interest income reaching 25.8 million euros and assets worth 859.1 million euros.

"Some 70 percent of demand for our commercial loans in the first semester came from export-related financing, while the remainder was from portfolio recycling and local (European) market financing," he said.

Indover expects its lending to grow by 30 percent this year to at least 150 million euros, from 117 million euros at the end of 2007, and is currently seeking to raise funds to support this expansion.

Chairy said in a bid to make the bank financially stronger, it would engage in the retail business next year by trying to lure companies in Europe and Asia to deposit their money in the bank.

"Funding from our retail business will support our ability to provide more loans with cheaper interest rates," he said, adding that the bank was still relying on funding from other wholesale banks to expand its business.

BI, which owns Indover, is required by the 2004 law on the central bank to sell its shares in companies because the companies are not related to the main task of a central bank.

Under the law, the divestment process should be completed by Jan. 15, 2009.

BI deputy governor Budi Mulya recently revealed state-controlled Bank Mandiri was the sole bidder for Indover.

Bank Mandiri president director Agus Martowardojo said the bank was still in the process of conducting a feasibility study for the takeover, which is slated for completion at the end of this year.

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