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tate-owned lender Bank Rakyat Indonesia (BRI) expects better growth in the future as it transforms its subsidiaries, which is expected to help them contribute more to the bank’s profits.

Publicly listed BRI, the country’s biggest micro lender, booked a 1.6 percent increase in net profits to Rp 12.04 trillion (US$915.04 million) in the first half of this year, as loans grew 17.3 percent year-on-year (yoy) to Rp 590.6 trillion while fee-based and other operating income rose 34.5 percent to Rp 7.59 trillion.

Next year, the bank expects its fee-based income to reach double-digits through empowering its subsidiaries and strengthening their roles in its total profits in the future, executives have said.

“We hope all of our subsidiaries will contribute Rp 1 trillion to our total profit this year and hope that the figure can double in the future,” vice president director Sunarso said on Monday.

As a major bank, BRI wants to develop its subsidiaries, in which it acts at both a major and minor shareholder, namely life insurer BRIngin Life, sharia lender BRI Syariah, agro-based lender BRI Agro and multifinance firm BTMU-BRI Finance.

Earlier this year, the bank gained approval from the Financial Services Authority (OJK) for its acquisition of a 91 percent stake in life insurer BRIngin Jiwa Sejahtera (BRIngin Life) from BRI Employee Welfare Foundation in an effort to expand business in the micro insurance sector.

BRI president director Asmawi Syam said BRIngin Life’s management was expected to develop a blueprint to become the country’s largest policy holder, as envisioned by the bank.

Sunarso said BRI was also finalizing the process of becoming the major shareholder, with a 99 percent share, in multifinance firm BTMU BRI Finance. BRI previously owned a 45 percent stake, while 55 percent was held by Japanese lender Bank of Tokyo-Mitsubishi UFJ (BTMU).

In order to support its loan growth target of 16 percent this year, the bank is preparing to issue a continuous bond offering (PUB) worth 20 trillion over two years, with Rp 10 trillion to be issued this year.

It also plans to issue medium term notes (MTN) worth up to Rp 5 trillion this year, while its subsidiary BRI Syariah is preparing the issuance of subordinated sukuk (Islamic bonds) worth Rp 1 trillion to strengthen its capital.

BRI finance director Haru Koesmahargyo said the bank predicted its gross non-performing loans (NPL) would remain manageable at a maximum of 2.4 percent this year, from 2.31 percent. The bank set aside a Rp 7.33 trillion provision in the first half, which is an allowance for impairments in bad loans, up 89.8 percent yoy.

Meanwhile, Citibank Indonesia, the domestic branch of US giant Citibank group, saw its net profit rise by 55 percent yoy to Rp 1.2 trillion in the first half, from Rp 777 billion in the same period last year, following an increase in net interest income by 15 percent to Rp 2 trillion.

The net profit increase was helped by a decline in loan provisions by 35 percent to Rp 397 billion between January and June as its net NPL decreased to 0.8 percent from 1.66 percent in the same period last year.

“We will continuously prioritize the principle of prudence in providing loans,” Citi Indonesia CEO Batara Sianturi said in a statement on Monday.