Bien Subiantoro (left): Bank BJB president director. KONTAN/Baihaki

Publicly listed regional development bank (BPD) of West Java and Banten, popularly known as Bank BJB, aims to increase lending by 22 to 25 percent this year through various sources of credit, as the accelerating economy depends more on loans.

Bank BJB’s lending grew by 21.52 percent last year to Rp 28.76 trillion (US$3.13 billion), according to a stock exchange file submitted on Monday. However, it saw single-digit growth in net profits as a declining operating income minimized the impact of strong-loan growth.

The West Java-focused lender booked Rp 962.7 billion in net profits in 2011, up 8.14 percent from 2010, pushing down earnings per share (EPS) by almost 6 percent to Rp 99.24, according to the file.

“Our net profit did not increase much because our operating expenses surged 41 percent due to branch expansion, promotional activities and new employee hire,” corporate secretary Adang Ahmad Kunandar told The Jakarta Post.

Income recorded under “other operating income”, which includes fee-based income derived from various client services, dropped 21.62 percent to Rp 240.17 billion, offsetting the increase in Bank BJB’s core business — lending.

Net interest and sharia income (NII), which reflects revenues generated from interest on assets (lending) minus the cost of servicing liabilities (deposits), jumped 15.43 percent to Rp 30.61 trillion.

Bank BJB shares slumped with the news, falling 4.5 percent to close at Rp 1,060 on Monday, compared with the stock index’s 0.11 percent loss. Bank BJB, which has a market value of more than Rp 10 trillion, has seen its shares surge 16.46 percent so far this year.

Bank BJB president director Bien Subiantoro said lending could have grown faster if the bank had not written off its bad loans. “There were missing figures because we wanted to write off NPL [non-performing loans].”

Bad loans remained manageable at 1.21 percent, well below banking regulator Bank Indonesia’s (BI) 3 percent threshold. “We want to maintain NPL at below 2 percent,” Bien said.

The consolidated loan-to-deposit ratio (LDR) increased by almost 150 basis points from a year ago, standing at 72.95 percent at the end of 2011, as overall third-party funds grew faster than lending, by 22.19 percent to Rp 39.04 trillion.

As of December last year, Bank BJB had Rp 54.45 trillion in total assets, up 25.33 percent from the same period in 2010.

Bank BJB would retain its focus on consumer and micro-loans, but commercial and corporate financing would remain robust to balance the lender’s credit portfolio, Bien said.

The lender signed on Monday an agreement with PT Serasi Autoraya, a subsidiary of PT Astra International (ASII), which focuses on transportation and logistics, to disburse Rp 300 billion in an investment loan.

Serasi Autoraya will use the money to purchase property, plants and equipment to support its business expansion, according to a press statement distributed by Bank BJB.

“But that’s only to balance our credit portfolio. The main focus remains on civil servants with fixed incomes. The second focus is on micro-lending,” Bien told reporters on the sidelines of the signing ceremony.

Bank BJB has set aside about Rp 50 billion to acquire 10 rural banks in the West Java area in an attempt to further boost its micro-lending business in the region.

The lender had an 18.3 percent capital adequacy ratio (CAR) as of December last year, well above the central bank’s 8 percent minimum requirement, and enough to fund its expansion.

—JP/Esther Samboh and Raras Cahyafitri

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