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ew micro lender Bank Mandiri Taspen Pos (Mantap) expects significant capital growth in the long term as it aims to become a mid-sized bank with a vastly larger business portfolio.

The bank, which is owned by three state-owned companies, currently has ample capital to help grow its business and expand its network, according to its president director, Nixon LP Napitupulu.

'€œWe are convinced that we will be a BUKU II bank by 2017 and we will have no issues with capital in the next two years at least,'€
Nixon said in a press briefing on Friday, adding that Mantap currently was still in the BUKU I category.

BUKU II banks are those with core capital of between Rp 1 trillion (US$73 million) and Rp 5 trillion, while BUKU I banks hold less than Rp 1 trillion in capital.

The bank had a capital adequacy ratio (CAR) of 51 percent as of September following the capital injection from its shareholders, Nixon said, adding that '€œwe will not be able to pay out dividends to our shareholders in the next two or three years.'€

According to Nixon, the bank will probably enter its critical point to increase its capital by 2018 when its CAR is expected to approach 20 percent.

'€œWe will probably propose additional capital or other options if the timing is right and market conditions are good. However, it is up to the shareholders to decide on the best option,'€ Nixon said.

As a first step to test the capital markets, Nixon said the bank was currently discussing with rating agencies on the possibility of issuing either a bond or medium-term note (MTN), which would be submitted in its business plan for 2016.

Nixon said the bank needed to issue a debt paper as it wanted to grow its loan for pensioners, a type of credit that is long-term with tenures of up to 10 years.

'€œWe will issue a debt paper, most likely above Rp 100 billion, either in third or fourth quarter next year if the market is favorable and the timing is good,'€ Nixon said.

Bank Mantap was established and is owned by state lender Bank Mandiri, pension insurer Taspen and postal company Pos Indonesia, by using then-Bank Sinar Harapan Bali as a vehicle for the joint venture.

Bank Sinar Harapan Bali was a Bali-based Mandiri subsidiary that focused on disbursing loans to micro and small businesses on the island.

The Financial Services Authority (OJK) gave its permit for the establishment on May 28 this year, while permission for the change of name was granted on July 27.

As of now, Mandiri controls a 58.25 percent stake in the bank, while Taspen and Pos Indonesia hold 20.2 percent each, and the remaining 1.35 percent is owned by minority shareholders.

Nixon said the bank'€™s total assets stood at Rp 2.12 trillion as of September, which is up 79 percent from Rp 1.18 trillion in the same period last year, adding that '€œwe are hoping for total assets to reach Rp 2.4 trillion by the end of this year.'€

The bank posted a 43 percent year-on-year increase in loans to Rp 1.24 trillion as of September, with third-party funding growing by 45 percent yoy to Rp 2.49 trillion at the end of the third quarter.