Publicly listed lender CIMB Niaga is looking to enter the league of major banks as it prepares to increase its core capital in 2015, according to its top executive.

CIMB president director Arwin Rasyid said on Monday that the private bank, part of Malaysia'€™s CIMB Group, was close to entering BUKU IV category, which lists domestic banks with the highest levels of
core capital.

At the moment, the BUKU IV category classifies banks that have core or tier-1 capital of more than Rp 30 trillion (US$2.53 billion) each.

There are only four banks that currently qualify; state lenders Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI), and private lender Bank Central Asia (BCA).

CIMB is now included in the BUKU III category, among lenders whose core capital amounts to between Rp 5 trillion and Rp 30 trillion. According to its first-half financial report, CIMB had Rp 25.67 trillion in core capital by the end of June.

'€œHopefully we will surpass the Rp 30-trillion mark next year. We are hoping to achieve it organically,'€ Arwin said.

He, however, declined to provide details on whether or not the bank would retain its full-year 2014 net profits previously allocated for dividends to realize the plan.

CIMB '€” currently the fifth-largest bank in terms of assets in Indonesia '€” decided not to disburse dividends for its operations ending in 2013 preferring to retain all net profits, which amounted to Rp 4.28 trillion, to strengthen its capital.

• CIMB Niaga now classified as BUKU III bank with Rp 25.67t core capital as of June
• Aims to be a BUKU IV bank next year with more than Rp 30t in capital 
• New status will enable CIMB Niaga to expand operations

CIMB may see slower growth in net profits this year as the country'€™s economic growth has slackened along with overall credit growth.

Arwin said the bank was anticipating a flat or lower net interest margin (NIM) than it posted in 2013, which was 5.3 percent.

The bank has already reaped Rp 1.95 trillion in net profits from its operations during the first six months.

As a BUKU IV lender in 2015, CIMB will be able to expand its operations, including joining Bank Indonesia'€™s (BI) digital financial services (DFS) program.

The DFS is a follow-up to BI'€™s branchless-banking pilot project, which is aimed at providing easy electronic financial transactions for millions of unbanked and underbanked Indonesians through use of mobile phones.

CIMB was an original member of the project, along with Mandiri, BRI, Bank Tabungan Pensiunan Nasional (BTPN) and Bank Sinar Harapan Bali. However, a new BI regulation on the DFS has set licensing priorities for BUKU IV lenders, leaving CIMB out of the game.

On Monday, CIMB Niaga announced its co-branding partnership with low-cost carrier AirAsia Indonesia in a move that is expected to help the bank gain at least 500,000 new credit card customers within the next five years.

With the partnership, CIMB Niaga will issue credit cards with the AirAsia logo, with which cardholders will qualify for special treatment such as accumulated points in exchange for benefits, as well as discounts, among other things.

The bank claims to have distributed 1.8 million credit cards so far, equal to around a 10 percent share of the domestic market, with average monthly transactions of Rp 1.5 trillion.

Bambang Karsono Adi, CIMB head of cards and merchant business, said the bank expected the total card number to grow 20 percent year-on-year.

On Monday, CIMB'€™s shares closed unchanged at Rp 975 on the Indonesia Stock Exchange (IDX).

The stock has gained 6 percent so far this year, under-performing the broader Jakarta Composite Index'€™s (JCI) 20.4 percent advance.

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