P

T Bank Maspion Indonesia, part of the Maspion Group, expects to see a 9.5 percent decline to Rp 35 billion (US$3.64 million) in net profits at the end of the year as a result of its lower credit interest rate policy. The bank implemented the policy early this year to increase its credit competitiveness, a Maspion executive said.

Starting from January 2012, the bank’s credit interest rates stood at between 9.5 percent and 11 percent, according to Maspion president director Herman Halim. Last year, the rates ranged from 12 to 13 percent.

“By reducing credit interest rates, we hope to attract more customers. Competition is tight among banks,” he said during a telephone interview on Friday.

However, despite expecting lower net profits, the bank aims to reach Rp 269.72 billion in interest income by year-end, up 18.9 percent from 2011. The growth will be supported by a higher number of customers.

During the first 10 months of this year, the Surabaya-based Maspion disbursed Rp 681.9 billion in new loans, growing almost threefold year-on-year. As of October 2012, the bank’s total amount of loans reached Rp 2.6 trillion.

At the moment, Maspion’s lending portfolio is dominated by retail sector loans at 46 percent, followed by small and medium enterprises (SME) loans at 43 percent and housing loans at 11 percent.

In retail, Maspion channels loans for working capital and various investment purposes, with each loan reaching more than Rp 5 billion. Meanwhile, in the SME sector, loan amounts range from Rp 500 million to Rp 5 billion.

The bank does not focus on one specific SME industry to avoid suffering losses should the industry experience a setback, according to Herman. “We try to widen our SME scope as much as possible. For example, we have SME clients working in the garment and iron industries,” he said.

Maspion’s non-performing loan (NPL) ratio, which is a bank’s ratio of bad loans, currently stands at 0.16 percent. It managed to reduce the NPL ratio from 0.45 percent last year by improving its customer selection procedures, Herman said, adding that it would maintain the ratio at 0.25 percent at the highest next year.

Between January and October 2012, the bank’s interest income climbed 18.4 percent to Rp 221.97 billion. Its net interest margin (NIM) stands at 5.3 percent.

The bank currently has 10 branches and 46 automatic teller machines (ATMs), which serve up to 69,000 customers in Bali, Central Java, Jakarta, East Java, North Sumatra, South Sulawesi and West Java provinces.

As of October 2012, Maspion’s total assets reached Rp 3.54 trillion. Its liabilities and equities reached Rp 3.15 trillion and Rp 384.69 billion, respectively.

To support its credit business, Maspion will go public in January 2013 by selling 380 million shares or 11 percent of its enlarged shares during an initial public offering (IPO). It has appointed PT Makinta Securities as underwriter for the IPO.

“All proceeds from the IPO will be used to strengthen our credit segment,” he said.

The bank expects to have received the necessary permits from the Capital Market and Financial Services Supervisory Agency (Bapepam-LK) by Dec. 27. It will then hold an initial offering period from Jan. 2 to 4, and is scheduled to list the shares on the Indonesia Stock Exchange (IDX) on Jan. 10.

The company has not decided on the price per share yet as it will conduct book-building first in the next few weeks, according to Herman.