S

tate lender Bank Rakyat Indonesia (BBRI) is currently in negotiations to take over a life insurance company as part of a wider program to boost the bank'€™s insurance business.

BRI president director Asmawi Syam said on Monday that it was holding talks with at least three life insurers about the possibility of taking over one of the firms.

'€œWe are looking at several firms, more than three life insurers. This is an effort to expand our business and then combine the new subsidiary with the units that we already have,'€ he said after attending a hearing at the House of Representatives.

BRI had allocated Rp 3 trillion (US$231.8 million) to finance its upcoming acquisitions, Asmawi said, adding that future inorganic growth would come from acquisitions of subsidiaries in other financial sectors as well.

BRI currently has three subsidiaries, namely sharia lender BRISyariah, agriculture-focused lender BRI Agro and remittance office BRI Remittance in Hong Kong.

Despite BRI being listed as a major financial firm, most of its assets are still generated by bank-only
operations.

Its latest financial report showed that it had Rp 801.95 trillion worth of consolidated assets by the end of 2014. Banking operations made up the lion'€™s share of the 97 percent, meaning that subsidiaries contributed a meagre 3 percent.

BRI has for several years expressed the intention to expand its business coverage by acquiring a subsidiary. Last year, it said that it was interested in taking over state life insurer Jiwasraya, which would then be merged with BRIngin Life, another life insurer.

BRIngin Life is affiliated to BRI and controlled by BRI'€™s pension fund. At the time, then BRI president director Sofyan Basir said that he wanted to merge the two to create a major life insurance company. The plan, however, never came to fruition.

Asmawi said that BRI was now in the process of selecting an investment bank to advise the lender on the acquisition plan. '€œSeveral investment banks have submitted documents to us [for the selection process],'€ he said.

The state lender '€” which currently earns the largest profits in Indonesia '€” is aiming for Rp 867.8 trillion in consolidated assets this year.

In lending, it hopes to post a 16.8 percent increase to Rp 572.8 trillion, while in deposits, it expects to book an 11.5 percent rise to Rp 669.5 trillion.

To help reach the target, BRI is set to launch its first ever floating bank services in June. The services will be offered on a boat '€” dubbed BRI Teras Kapal '€” in the Thousand Islands regency.

Asmawi said that the boat was expected to help cater to its existing customers and open up access to new clients in the area. '€œOnce we are able to smoothly run the operations, we will open a formal branch there and the boat will move somewhere else,'€ he said, adding that an additional boat would be deployed if needed.

BRI posted a 14.35 percent increase in net profits last year to Rp 24.2 trillion, making it the country'€™s most profitable bank at present.

Its outstanding loans reached Rp 490.91 trillion as of 2014, a 13.88 percent increase from Rp 430.62 trillion in 2013.

The micro lending, which contributed to 31.25 percent or a majority portion of its total loans, grew 16 percent. The micro segment also saw 7.3 million customers as of last year, up from 6.5 million in 2013, the bank said recently.