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BNI to form sharia banking joint venture with Saudi-based ICD
State-owned lender Bank Negara Indonesia (BNI) plans to spin off its sharia unit and expand it into a joint-venture sharia bank with Saudi Arabia-based Islamic Corporation for the Development of the Private Sector (ICD) next year
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State-owned lender Bank Negara Indonesia (BNI) plans to spin off its sharia unit and expand it into a joint-venture sharia bank with Saudi Arabia-based Islamic Corporation for the Development of the Private Sector (ICD) next year.
BNI and ICD, an affiliation of the Islamic Development Bank (IDB), signed a memorandum of understanding last October and agreed to provide initial capital worth US$500 million for the planned venture.
BNI president director Gatot M. Suwondo said both parties were still negotiating the amount of shares in the venture.
"BNI will probably have between a 20 percent and 30 percent stake, while ICD will hold the remainder," he said Friday.
Gatot added BNI had already completed evaluating its sharia unit performance, while ICD had yet to conclude its examination on its unit.
The venture is expected to give BNI more opportunities to tap the customer base in the Middle East.
BNI's sharia unit has developed steadily since its inception in 2000. As of July this year, the unit's assets reached Rp 3.3 trillion (US$362 million), up by 71.8 percent from Rp 1.9 trillion a year earlier.
The unit also recorded a 99.2 percent jump in customer financing to Rp 2.8 trillion during the first half of the year, from Rp 1.4 trillion in the same period last year.
Gatot said the bank was expected to post Rp 1.7 trillion in net profit this year, twice the Rp 898 billion recorded in 2007, on more aggressive loan disbursements.
Achmad Baiquini, BNI's director for small, medium and sharia division, said the bank planned to channel loans worth around Rp 600 billion to the creative industry alone this year.
He said most of the loans would be handed out to handicraft and advertisement companies.
"This amount is 30 percent of the bank's overall lending of Rp 2 trillion targeted for this year," he said, adding around Rp 1.2 trillion was allocated for the trade sector.
BNI is the country's third largest lender by assets after Bank Mandiri and Bank Central Asia. (ewd)
