S

tate lender Bank Tabungan Negara (BTN) is slated to raise Rp 1.5 trillion (US$124.93 million) from the securitization of its mortgage assets in an attempt to generate funding.

BTN corporate secretary Eko Waluyo said on Friday that the securitization (KIK-EBA) would be carried out in the fourth quarter and that it was waiting for approval from the Financial Services Authority (OJK).

'The plan is to carry it out in October. The process is ongoing and we have filed [the necessary documents] to the OJK,' he said on Friday.

BTN, whose business is focused on providing mortgages, has been issuing the KIK-EBA regularly every year since 2009. It is the only lender currently involved in KIK-EBA issuance in Indonesia.

Securitization of mortgage assets essentially enables a bank to offer and sell its home loans portfolio ' those which pass on-time payments ' as investment instruments. The maturity period of the securities usually ranges from one to three years.

Up to now, BTN has generated a total of Rp 3.95 trillion of funds from the KIK-EBA.

'Our issuance partner has been SMF [Sarana Multigriya Finansial], a state secondary mortgage provider. We are partnering with SMF as well for the upcoming issuance,' Eko said.

BTN will use funds from the October issuance to meet its remaining financing needs. It usually disburses between Rp 2 trillion and Rp 2.5 trillion in loans every month, meaning that it needs at least Rp 6 trillion in financing until year-end.

Part of the funding will also come from its third-party funds (DPK) and repayment of its loans. It expects to build up fee-based income from transactions of the KIK-EBA as well, he said.

As previously reported, BTN is mulling over the possibility of extending the KIK-EBA issuance to foreign investors. It has received offers from Asian and European investors, but has not taken a decision as yet, according to Eko.

'It is in our interest, but we are waiting for the right time and pricing to execute the plan,' he said.

Meanwhile, as with other domestic lenders, BTN is prepared to see lower growth rates in both its credit and funding segments. The rates are set at 18 to 20 percent year-on-year.

With the targets, BTN's outstanding loans and DPK are estimated to reach Rp 118.55 trillion and Rp 115.45 trillion, respectively, by the end of the year.

In the first six months of 2014, it reached 90 percent of the loans target and 87 percent of the DPK target.

Its June balance sheet shows that BTN ' one of the top 10 lenders by assets in Indonesia ' controlled a total of Rp 135.62 trillion in assets, Rp 124 trillion in liabilities and Rp 11.62 trillion in equities.

On Friday, BTN saw its shares ' sold as 'BBTN' on the Indonesia Stock Exchange (IDX) ' fall 3 percent to Rp 1,135 apiece from the previous day.