Mutiara to boost micro lending to strengthen capital

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Keep talking: Bank Mutiara executives chat before the bank’s public event in Jakarta on Monday.(JP/Nurhayati)

Publicly listed lender Bank Mutiara, previously known as Bank Century, is planning to boost its micro lending in an attempt to expand its business while maintaining a high capital adequacy ratio (CAR).

Mutiara, which has struggled toward healthier performance following its controversial Rp 6.7 trillion bailout in 2008, plans to open around 50 micro credit outlets before the year’s end.

“We hope to start in the fourth quarter. We will cooperate with several institutions, including PNM [state-owned firm PT Permodalan Nasional Madani] and a number of cooperatives,” Mutiara president director Maryono said on Monday.

Improving micro lending is part of the bank’s efforts to boost credit to small and medium enterprises as well as consumer credit, which carry low risk weighted assets, according to Maryono.

“With low risk weighted assets, our CAR will be reduced [due to the expansion] but only in a small amount,” Maryono said.

Mutiara’s CAR stood at 11.37 percent at the end of June, increasing from 9.93 percent from June last year. The central bank requires a minimum CAR of 8 percent.

Meanwhile, its non-performing loan (NPL) ratio edged just under the central bank’s 5 percent threshold at 4.82 percent, a significant improvement from 10.44 percent in the same period last year.

Mutiara reported its lending reached Rp 10.45 trillion at the end of June, a 25.74 percent increase compared to Rp 8.3 trillion year-on-year.

The company is targeting to achieve Rp 11.34 trillion in lending by the end of the year, a 24 percent surge from last year’s Rp 9.14 trillion.

For third party funds (DPK), Mutiara is aiming to manage Rp 12.66 trillion by the year’s end, increasing by 13 percent compared to Rp 11.2 trillion in 2011. As of the end of June, the bank’s DPK reached Rp 11.61 trillion.

As its primary stakeholder, the Deposit Insurance Agency (LPS) is desperately struggling to improve Mutiara’s performance as it attempts to sell the bank. Following a controversial bailout in light of the global financial crisis in 2008, LPS now holds 99.99 percent stake in Mutiara, and is required to divest its shares by 2013.

In last year’s offering, LPS failed to seal a deal with investors expressing interest in Mutiara. Early this year, LPS opened the bank’s shares offering to the public for the second time. The offering period should have closed in April, however, LPS extended it until June 1.

LPS’s divestment team chairman Mirza Mochtar said that seven investors had shown interest in acquiring Mutiara.

“However, only three of them submitted the required documents, which are now being assessed,” Mirza said, declining to provide further details.

As previously reported, investment company Yawadwipa said that it was interested in buying Mutiara.

Efforts to sell Mutiara have faced several challenges that have thus far kept investors at arm’s length, including a recent Supreme Court ruling that requires the bank to reimburse 27 investors the Rp 35 billion in funds that Bank Century invested in now defunct PT Antaboga Delta Sekuritas.

Maryono said the bank was still waiting to receive a copy of the court order and to discuss the matter with LPS before settling the matter.

The trading of Mutiara’s shares has been suspended since Nov. 21, 2008.

— Raras Cahyafitri