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tate lender Bank Tabungan Nasional (BTN) said on Wednesday that it was looking to increase its fee-based income in 2014, supported by fresh expansion in the bancassurance business.

BTN president director Maryono said the lender aimed to book 40 percent growth in its fee-based income, up from the 38 percent growth level recorded in 2013. With this target, BTN estimates it will reap around Rp 1.12 trillion (US$96.73 million) in fee-based income.

Part of the higher growth would be generated by the upcoming launch of its bancassurance products, in partnership with its three life insurers, Asuransi Jiwasraya, Zurich Topas Life and Generali Indonesia. Fee-based income currently accounts for less than 10 percent of BTN'€™s earnings, but Maryono said he saw opportunities to improve that share with its new venture into bancassurance, which allows insurers to market their products to bank customers.

'€œIf we look at other lenders who already have their own bancassurance products, their fee-based income exceeds the 10 percent benchmark,'€ he said.

BTN director Irman Alvian Zahiruddin said each of the bank'€™s three life insurers would devise three products. '€œWe are now awaiting approval from the OJK [Financial Services Authority] to market them,'€ he said. If approved, it will be BTN'€™s debut in the world of bancassurance.

Irman added that the bancassurance products were also aimed at catering to its 8,500 priority customers, whose personal funds amounted to around Rp 1 billion per person.

BTN plans to secure a larger share in the middle- and upper-class market segment. The lender, which is popular for its loans for subsidized housing, established its priority banking services in 2011. It currently has more than 22 priority banking outlets and plans to open 10 more this year.

Meanwhile, Maryono said the bank would stick to its original 2014 business targets, even though the country'€™s economy slowed in the first quarter to 5.2 percent from 5.7 percent the previous quarter. '€œWe don'€™t have any plan to revise our targets because our growth has been positive so far.'€

For 2014, BTN has set its lending growth rate at 18 percent and 20 percent for lending and funding segments, respectively. By year-end, its outstanding loans are expected to hit Rp 118.55 trillion, while its third-party funds are expected to reach Rp 115.45 trillion.

The bank'€™s first quarter financial report shows that BTN'€™s loans surged 20.4 percent year-on-year to Rp 102.82 trillion and its third-party funds increased 17.4 percent on a yearly basis to Rp 102.28 trillion.

Maryono said the government'€™s plan to end the housing loan liquidity facility (FLPP) next year would not significantly affect its business, as its loans were already dominated by housing loans for the non-subsidized segment.

By the end of March, non-subsidized mortgages accounted for 52.6 percent of BTN'€™s housing-loan portfolio, followed by subsidized mortgages with 33.6 percent and construction loans with the remaining 13.8 percent.

The Public Housing Ministry introduced the FLPP, government-backed mortgages, in 2010 to help low-income people acquire housing. It plans to introduce a new program next year for low-cost apartments to replace the current FLPP.