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rivate lender PT Bank Sinarmas (BSIM) is aiming to expand microlending services next year by reaching out to more micro, small and medium enterprises (MSMEs) in regional areas.

To achieve its aim, the lender will introduce branchless banking to reach micro and small businesses as well as cooperatives.

'€œWe will focus on growing our microlending to 10 percent from its current level of around 8 percent,'€ BSIM president director Freenyan Liwang said after a press conference on Friday.

The target is part of the lender'€™s efforts to meet the Financial Services Authority (OJK) regulation that requires local banks to channel 20 percent of their lending to MSMEs by 2018.

As of September, Bank Sinarmas had disbursed Rp 17 trillion (US$1.2 billion) of loans, about 80 percent of which went to corporations, 12 percent to retail and 8 percent to MSMEs.

'€œOur MSMEs and cooperative customers are mostly in Java and Sumatra. We will increase our customer numbers in Sulawesi and Kalimantan next year,'€ Freenyan said.

According to him, the lender was focusing on certain sectors like retail and wholesale trade, accommodation, food and beverages, processing, agriculture and construction. '€œOur customers from the cooperatives are mainly oil palm farmers,'€ he added.

BSIM has only recently begun reaching out to MSMEs and cooperatives this year.

Previously, it focused on big corporations in sectors such as retail and wholesale trade, real estate, finance, processing, entertainment, construction and agriculture.

Regarding its plan to introduce branchless banking, the lender will run the program in Temanggung and Magelang in Central Java.

Bank Sinarmas reported a 37 percent increase in lending in September year on year to Rp 17 trillion from Rp 12 trillion last year. Its CASA increased by 25 percent from Rp 9 trillion to Rp 11 trillion.

Non-performing loans increased from 2.04 percent to 2.27 percent. According to bank director Frenky T. Susilo, they have not risen above a manageable level.

He went on to say that a significant bad debt contribution had come from mining logistics companies as the mining industry has seen slow growth, which has affected related logistics companies.

The net interest margin (NIM) has dropped to 5.72 percent from 6.02 percent. '€œHowever, this [NIM] is still above the industry rate and average of Book II banks with 5.32 percent and 4.61 respectively,'€ Frenky said.

The lender'€™s enterprise banking director Loa Johnny Mailoa meanwhile said the company would grow its fee-based income by improving transactional banking through information and technology services.

Johnny said that the fee-based came from bank assurance and transactional banking, such as remittance, money transfer and credit card fees.

The subsidiary of Sinar Mas Group conglomerate was established in 2005 after the group acquired Bank Shinta. (rbk)