P

ublicly listed PT Bank Mutiara planned to increase the proportion of its low-cost funds to total third-party funds in an attempt to support credit expansion, the bank’s newly appointed president director said on Monday.

Mutiara president director Sukoriyanto Saputro, who was installed in his new position after an extraordinary general meeting, said he would continue improving the value of the bank, which was previously Bank Century.

“We will improve performance to reach the same level as our peers. We will develop funding to the retail sector in order to lower the cost of funds, and we will use micro lending as the bank’s main source of income in the future,” said Sukoriyanto, who previously served as PT Bank Mandiri’s corporate secretary.

Mutiara’s third-party funds reached Rp 13.4 trillion as of the end of 2012, increasing by about 20 percent compared to Rp 11.2 trillion year-on-year. About 15 percent of the total third-party funds, equal to around Rp 2 trillion, were current account and savings account (CASA), which gave lower interest rates to customers, according to Mutiara managing director Benny Purnomo.

The remaining 85 percent of the 2012 total third-party funds were time deposits.

“Our target is for a CASA increase of around 50 percent this year compared to last year,” Benny said.

Benny added that the bank expected to see its third-party funds stand at Rp 15 trillion by year end, comprising 17.5 percent of CASA and 82.5 percent of deposits.

Maintaining low-cost funds such as savings and checking accounts is necessary for banks as they can use the low-interest funding to disburse loans with higher interest rates. A higher proportion of low-cost funds compared to high-cost funds will also reduce the bank’s total cost of funds, the interest burden it has to pay to customers.

Benny laid out three strategies to increase the bank’s third-party funds: applying competitive interest rates, improving ATM machine networks and Internet banking, and bundling savings programs with door prizes.

Mutiara reported that its lending rose 18.7 percent to Rp 11.1 trillion last year compared to Rp 9.3 trillion in 2011. Despite growing credit disbursements, the lender managed to lower its net non-performing loan (NPL) ratio to 3.4 percent in 2012 compared to 4.5 percent a year earlier.

Mutiara aims to see its lending reach Rp 12.9 trillion by the year’s end, a 16 percent rise compared to last year. Lending to the micro sector will result in higher contributions, according to Sukoriyanto. He said Mutiara was planning to open 50 to 100 outlets for micro lending, which would be established in the bank’s branch offices.

Bank Mutiara is currently 99.99 percent owned by the Indonesia Deposit Insurance Corporation (LPS), which acquired the bank in 2008 following the controversial Rp 6.7 trillion government bailout. The LPS is required to sell the bank within five years of the acquisition.

Several bidding periods have been performed; however, the LPS has so far failed to find a suitable buyer. The LPS would likely open a new bidding period this January or February, LPS executive director Mirza Adityaswara said.

Toll road operator PT Citra Marga Nusaphala Persada (CMNP) previously said that it had been approached to purchase the bank. Mutiara’s former president director, Maryono, said the bank only offered the CMNP the chance to purchase several of its non-performing assets.

“The offer is open not only to the CMNP but also to anyone interested in it. Moreover, the divestment of Mutiara lies with the LPS,” Maryono said.