S

tate lender Bank Negara Indonesia (BNI) says that its search for a new general insurance subsidiary is ongoing and that it would prefer to go solo rather than develop the business with a partner.

BNI consumer banking director Anggoro Eko Cahyo told The Jakarta Post on Thursday that it was still conducting an assessment on the future unit, adding that an entry into general insurance would provide the bank '€” now the fourth largest lender in terms of assets '€” with ample business opportunities.

The first priority would be to work with millions of its banking customers, as well as with clients of its subsidiaries, namely in life insurance and sharia banking, Anggoro said.

He added that the high potential in insurance had been demonstrated by subsidiary BNI Life.

Last year, the life insurer bagged Rp 128.78 billion (US$9.51 million) in net profits, which translated into around Rp 77.27 billion of profit for BNI as the owner of a 60 percent stake in the company.

'€œBNI Life is not our biggest subsidiary, but its growth has been very positive and we are looking for a similar contribution from the upcoming general insurance unit,'€ he said.

However, unlike BNI Life, which is jointly owned by BNI and Japanese life insurer Sumitomo Life Insurance Company, the lender may not work with a partner to develop a joint venture in general insurance.

'€œWe will most likely do it alone, without a partner. At the moment, we are mulling over acquiring an existing company, such as the one owned by BNI'€™s pension fund, or establishing a new one from scratch,'€ Anggoro said.

BNI finance director Rico Rizal Budidarmo said on Friday that it had not allocated specific funds for the general insurance unit and that it was waiting for '€œgood timing'€ to execute the plan.

In BNI Life'€™s case, the lender entered into a Rp 4.2 trillion joint venture agreement with Sumitomo Life in 2013, during which the Japanese company gained 40 percent ownership.

When the general insurance plan is realized, the new unit will add to BNI'€™s list of subsidiaries that currently includes BNI Life, sharia lender BNI Syariah, financing firm BNI Multifinance, securities company BNI Securities and financial services provider BNI Remittance Ltd. in Hong Kong.

Meanwhile, in terms of banking, Anggoro said that the publicly listed BNI had lowered its consumer banking target, in line with an overall business revision that it submitted to the Financial Services Authority (OJK) last month.

BNI is now looking at a growth range of 12 percent to 14 percent in consumer banking, down from its previous projection of 15 percent to 17 percent. The new range will drive the outstanding loans in consumer banking to reach Rp 58.27 trillion to Rp 59.31 trillion.

Its latest financial report revealed that during the first six months of the year, BNI was able to boost consumer loans by 10.6 percent year-on-year (yoy) to Rp 53.49 trillion.

According to Anggoro, mortgages will still make up the largest chunk of consumer banking, even though the segment'€™s growth is constrained by weak demand. The mortgage segment, as shown by the report, only climbed 1.2 percent yoy in the first half.

'€œWe are expanding our credit card and payroll segments to compensate for the slowdown in mortgages. [The] credit card [segment] is especially lucrative with its attractive margin,'€ he said.

BNI'€™s first-half report showed that credit cards became the segment with the highest growth in consumer banking, jumping more than 60 percent on an annual basis.