S

tate lender Bank Tabungan Negara (BTN) plans to forge more partnerships with state institutions to generate more cheap funds, according to its executive.

BTN retail funding and distribution director Sis Apik Wijayanto said on Monday that the partnerships would provide a pool of new customers for the publicly listed bank.

 '€œSome of the existing cooperation has allowed us to manage the finances of our partners'€™ customers and they eventually open up savings accounts at BTN. We are exploring similar business opportunities that we hope to realize this year,'€ he said.

He attributed the collaboration with state postal firm PT Pos Indonesia as one successful example, adding that the collaboration had generated at least Rp 2 trillion (US$149.78 million)-worth of cheap funds in the form of savings at BTN.

Sis added that it was in the middle of finalizing a partnership with a state-owned company that he claimed had '€œthousands of working units and millions of customers'€.

When finalized, the deal is expected to boost BTN'€™s portion of cheap funds '€” comprising customers'€™ savings and demand deposits '€” to exceed the portion of its time deposits, known as '€œexpensive funds'€ as well.

It is also looking to capitalize on its recently launched '€œLaku Pandai'€ program in Palangkaraya, Central Kalimantan, to net new customers.

As previously reported, BTN has so far relied on time deposits and bond issuance as major funding sources to finance its lending portfolio, which is dominated by mortgage.

According to its latest data, time deposits accounted for 52 percent, equal to Rp 53.1 trillion, of its total customer deposits as of May.

'€œHowever, we want to turn things around, so that the portion of cheap funds can reach higher than 51 percent of the total customer deposits by the end of the year,'€ he said, adding that it had started slashing the interest of its time deposits to reduce the bank'€™s exposure to expensive funds.

BTN also hopes that such a move will lower its overall costs of funds and improve profitability.

BTN president director Maryono reiterated during a hearing at the House of Representatives on the same day that the bank targeted a net profit increase of at least 40 percent this year.

If achieved, the rise will bring BTN'€™s profit to stand at Rp 1.57 trillion in 2015 from Rp 1.12 trillion posted in 2014.

'€œWe have included the government'€™s one-million housing program as one factor that will drive our profit higher,'€ Maryono said.

BTN is well on its way to reaching its target, as revealed by its May financial statement.

It booked around Rp 677.53 billion in net profit from its banking operations in the January to May period. The figure represents almost half of its full-year target.