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ears go by and publicly listed private lender Bank Tabungan Pensiunan Nasional (BTPN) has seen its micro-business clients grow into larger entities.

As such, the mid-sized lender is shifting focus to channeling loans to small and medium enterprises (SMEs), which can borrow up to around Rp 5 billion (US$380,000). Micro businesses, on the other hand, can only borrow up to Rp 500 million.

“Many of our micro clients have upgraded to become SMEs. If we don’t have the loan products they need, then they will go to other banks,” BTPN finance director Arief Harris Tandjung said after the bank’s extraordinary shareholders meeting on Friday.

The value of loans channeled to SMEs is catching up to that of loans to micro businesses. In June 2015, outstanding micro loans amounted to Rp 9.4 trillion while those to SMEs totaled Rp 5.4 trillion. In March this year, meanwhile, micro loans had dropped to Rp 8.5 trillion whereas SME loans had jumped to Rp 7.3 trillion.

Overall, BTPN’s loans had grown 11 percent as of March this year to Rp 59.3 trillion year-on-year (yoy) thanks to an 18 percent increase in lending to micro, small and medium enterprises (MSMEs) to Rp 15.8 trillion in outstanding loans. Meanwhile, loans channeled to pensioners saw 8 percent growth to Rp 38.4 trillion, dominating the bank’s lending portfolio.

The lender, which is known for its MSME empowerment programs that aim to scale up its micro business clients, is eyeing 40 to 50 percent SME loan growth this year, kontan.co.id reported.

As a consequence of its new focus, the bank has seen investment in programs to support SME loans eating into its income. BTPN saw its net profits drop 11 percent yoy as of the end of March to Rp 429 billion.

“If we disregard all new investments, our profits actually climbed. With this in mind, we are optimistic that BTPN will continue to improve its performance going into the future,” BTPN president director Jerry Ng said in a recent statement.

The bank — owned by Japan’s Sumitomo Mitsui Banking Corporation (SMBC) and US private equity firm TPG Capital — invested Rp 997 billion in growing its SME loans in the first three months of this year, including for human capital and setting up a new unit assigned to handle SME clients. It also spent Rp 80 billion in the same period on branchless banking developments.

Not taking into account these investments and other operating expenses, BTPN’s operating income grew by 9 percent to Rp 2.2 trillion. However, with a greater increase in operating expenses, which rose by 18 percent to Rp 1.3 trillion, the bank’s net operating income declined by 4 percent yoy to Rp 821 billion as of March this year.

With 11 percent loan growth as of March, BTPN maintained its gross non-performing loan (NPL) at a healthy level of 0.7 percent, an improvement from 0.8 percent in March last year, thanks to a selective debtors’ profile. Deposits, meanwhile, grew by 14 percent to Rp 61.7 trillion over the same period.

Net interest margin (NIM), the difference between interest rates charged on lending and deposits, remained high at 11.4 percent in the first quarter this year, from 11.3 percent in the same period last year.