State lender Bank Rakyat Indonesia (BRI) '€” currently the country'€™s most profitable bank '€” hopes to generate Rp 12 trillion (US$922.51 million) worth of funds from a continuous bond issuance in an attempt to diversify its funding sources.

The bank'€™s newly elected director Haru Koesmahargyo said it would sell the debt papers in stages from 2016 until 2018. '€œWe will try to raise Rp 4 trillion in each issuance,'€ he said after being appointed director during a BRI annual general shareholders'€™ meeting on Thursday.

By issuing the bonds, BRI will be able to diversify its current funding options, which are now dominated by savings, demand deposits and time deposits.

'€œWe have many long-term financing commitments in small and medium business segments that require long-term funding sources. We cannot solely rely on customers'€™ deposits because they are short term,'€ said Haru, who served as acting treasury division head prior to his appointment.

The decision to generate funds from the capital market is also meant to anticipate financial regulators'€™ planned policy on securities.

As reported before, Bank Indonesia (BI) and the Financial Services Authority (OJK) have said they will issue policies that will allow securities issued by banks to also be considered components of deposits, thus improving liquidity in the banking industry.

Haru said that BRI had also planned on issuing foreign-denominated bonds, but postponed the move because of ongoing volatility in the exchange rate.

In the general shareholders meeting, besides appointing Haru, BRI'€™s shareholders appointed other executives to serve on the bank'€™s board of directors and board of commissioners. As predicted earlier, the shareholders installed Asmawi Syam as president director, replacing Sofyan Basir, who left to lead state electricity firm PLN last year.

The shareholders also named Sunarso, a former Bank Mandiri director, as its vice president director. While at Mandiri, Sunarso was in charge of the commercial and business banking segment that included the disbursement of government-sponsored micro loans (KUR). BRI itself is a major player in the KUR business.

On the board of commissioners, BRI saw the arrival of new figures, namely Gatot Trihargo, Gatot Suwondo and A. Sonny Keraf. Gatot Trihargo is a familiar face to BRI because of his current capacity as a liaison officer between the lender and the State-Owned Enterprises Ministry.

Gatot Suwondo, on the other hand, was previously the president of state lender Bank Negara Indonesia (BNI) and had initiated various partnerships between the two banks during his seven-year tenure.

Meanwhile, Sonny was a former state minister of environment and also served in the House of Representatives, representing the Indonesian Democratic Party of Struggle (PDI-P).

During a press conference after the meeting, Asmawi emphasized BRI'€™s focus on its micro and small banking segments.

He said it was ready to deploy around 50,000 individual micro-banking agents across the country to support its branchless banking program this year.

'€œWe initially wanted to work with 35,000 agents only, but extended the number to 50,000 because most of our customers showed high interest in becoming agents for the program,'€ he said.

The program is part of OJK'€™s Laku Pandai scheme to provide millions of unbanked and underbanked people throughout the archipelago with basic saving and lending products.

BRI is set to launch its first branchless banking project on March 27 in Papua.

The bank posted Rp 24.2 trillion (US$1.93 billion) in net profits last year, making it the country'€™s most profitable bank.

BRI saw 14.35 percent growth in net profits from Rp 21.16 trillion in 2013. Its outstanding loans reached Rp 490.91 trillion as of 2014, an increase of 13.88 percent from Rp 430.62 trillion in 2013.

The bank also posted Rp 600.4 trillion in third-party funds last year, an increase of 23.45 percent from Rp 486.37 trillion in the same period of 2013. BRI managed to expand its funding higher than its loan growth because of surging demand for time deposits, which posted the highest growth with 40.6 percent year-on-year, while current accounts and savings increased by 14.2 percent and 10.7 percent respectively.