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Jakarta Post

BRI Syariah goes public, eyes status upgrade

On the first trading day, BRI Syariah’s shares jumped by 19.6 percent to Rp 610 per share, from the initial offering price of Rp 510. 

Winny Tang (The Jakarta Post)
Jakarta
Fri, May 11, 2018

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BRI Syariah goes public, eyes status upgrade A bank officer talks to a customer at a Bank Syariah Mandiri branch in Central Jakarta. (The Jakarta Post/Jerry Adiguna)

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tate-owned lender Bank Rakyat Indonesia (BRI) is pinning high hopes on the growth of its Islamic lender subsidiary, BRI Syariah, as the latter has finally taken a step to go public in order to boost financing.

As a parent company, BRI hopes that BRI Syariah can use the proceeds from its initial public offering (IPO) to expand financing and help upgrade itself to become a BUKU III category bank, with core capital between Rp 5 trillion (US$355 million) and Rp 30 trillion.

“We have high hopes for BRI Syariah because the sharia market in Indonesia is still small, be it in the retail or corporate sector, while the demand is huge,” BRI finance director Haru Koesmahargyo said on Wednesday at the Indonesia Stock Exchange (IDX) building in Jakarta.

On the first trading day, BRI Syariah’s shares jumped by 19.6 percent to Rp 610 per share, from the initial offering price of Rp 510. BRI Syariah, listed under the code “BRIS”, became the 11th company to list its shares on the bourse in 2018, and the first of its kind for a sharia state-owned subsidiary bank.

Through the corporate action, the lender has reaped Rp 1.33 trillion in fresh funds. Some 80 percent of the funds will be used to boost sharia financing. Additionally, 12.5 percent will be allocated for the development of information and technology, and 7.5 percent for expanding its branch networks across Indonesia.

The firm has appointed PT Bahana Sekuritas, PT CLSA Sekuritas Indonesia, PT Danareksa Sekuritas and PT Indo Premier Sekuritas as joint lead underwriters.

BRI Syariah president director Moch. Hadi Santoso said the bank aimed to increase financing by 17 percent this year. First quarter results showed that financing grew by 8.62 percent to Rp 19.53 trillion, year-on-year (yoy).

Haru said from its target to achieve double-digit growth in financing, combined with the IPO funds it received, BRI’s subsidiary could become a bank in the BUKU III category by the end of 2018.

“After this IPO, BRI Syariah only needs Rp 200 billion to achieve the BUKU III category, which we think can be achieved through the accumulation of its profits in 2018,” he stated.

Moreover, BRI as the parent company does not have plans to inject any more capital to BRI Syariah this year.

Currently, the lender continuously focuses on expanding the growth of the banking and sharia industry in Indonesia, as well as managing haj funds and other Islamic finances. It also provides facilities to finance Islamic fashion, the halal industry, sharia tourism and others.

It reported Rp 54.38 billion of net profit in the first three months of 2018, an increase of 63.94 percent compared to the same period last year. The increase in net profit was primarily supported by the rise in operational income.

Its total assets also rose by 21.82 percent to Rp 34.73 trillion, from the same period last year of Rp 28.51 trillion. The bank’s capital adequacy ratio stood at 23.64 percent as of March, yoy.

Meanwhile, the lender’s gross non-performing loans ratio financing was at 4.92 percent in the first quarter this year, a jump from 4.71 percent before, despite still hovering slightly below the limit set by the regulator at 5 percent.

Regarding non-performing financing (NPF), Hadi said: “We have created a mapping for the NPF problem. We have also ensured enough provisions for NPF.”

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