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xecutives at state-owned banks have asked the government to reduce the dividend-payout ratio for the financial year ending in 2014, as they need to build up sufficient capital from profits to carry out expansions and to comply with higher capital requirements as stipulated in an international regulation.

According to Bank Tabungan Negara (BTN) president director Maryono, the lender hoped to see the ratio lowered to between 15 and 20 percent, down from the 30 percent imposed for the financial year that ended in 2013.

'€œA lower ratio would provide us with a greater opportunity to expand our business, as the funds that would be paid to the government could be used instead as additional capital,'€ he said on Monday.

'€œOur CAR [capital adequacy ratio] would be even stronger to meet the Basel III requirements and it would help us expand our credit portfolio by 17 percent,'€ he said, adding that BTN'€™s CAR could also be pushed up to between 16 to 17 percent from the current 15 percent.

Basel III is a set of banking regulations aimed at ensuring greater prudence in the international banking industry. It increases the minimum tier-1 capital that banks must have to 6 percent from 4.5 percent in 2013, and it requires them to have additional capital as a conservation buffer. All banks must possess 10.5 percent in minimum capital and conservation buffer ratio by Jan. 1, 2019.

Separately, Bank Negara Indonesia'€™s (BNI) finance director, Yap Tjay Soen, said the bank hoped to be able to retain higher profits with a lower payout ratio.

'€œIt [the ratio] is supposed to be suppressed so that we can disburse loans. Banking is a capital-intensive business. Low capital will make us vulnerable to shocks,'€ he said, adding that BNI would prefer a 20 percent ratio.

Meanwhile, Mandiri president director Budi Gunadi Sadikin said it would opt for a reduction in the current ratio. '€œBut if the government cannot lower it, I hope it can maintain it at the same level because investors like predictability,'€ he added.

The government holds 56.7 percent of shares in Bank Rakyat Indonesia (BRI), and an average 60 percent ownership in Bank Mandiri, BNI and BTN. It received a total of Rp 8.79 trillion (US$752.14 million) in dividends from all state lenders last year. BRI was the biggest contributor with Rp 3.6 trillion, followed by Mandiri with Rp 3.38 trillion and BNI with Rp 1.63 trillion. The BTN, which focuses its business on mortgages, paid Rp 281 billion.

The BTN recently paid a total of Rp 468.65 billion in dividends '€” from profits generated through 2013 '€” to its shareholders, which was equal to 30 percent of its overall net profits of Rp 1.56 trillion.

In the 2015 state budget, the government says it is looking to receive around Rp 8.79 trillion in dividends '€” generated from operations during 2014 '€” from state banks. However, no information was immediately available on the expected payout ratio.

Gatot Trihargo, deputy for business services at the State-Owned Enterprises Ministry, said it was mulling the possibility of lowering the ratio to 20 percent, acknowledging that the lenders needed to prepare themselves for Basel III.

The ministry itself predicted that the state banks would be affected by the ongoing economic slowdown, although their net profits would likely grow by 15 to 17 percent in 2014, he added.