State-owned lender Bank Rakyat Indonesia (BRI), the country’s most profitable lender, is planning to acquire a general insurance company as part of its strategy to provide an integrated financial services solution to customers.

The publicly listed bank had allocated Rp 1.5 trillion (US$105.6 million) in capital expenditure to finance the acquisition, said president director Suprajarto recently.

“We already have other [financial services] businesses like securities and life insurance, so we want to complete our business with [acquiring] general insurance,” he said after an extraordinary general shareholders meeting in Jakarta.

Suprajarto revealed that one general insurer had caught BRI’s attention among many prospective companies. However, he declined to specify which insurer it was.

He said the bank was planning to complete the acquisition by the first half of this year, depending on how long the process took, as it had to seek approval from its board of commissioners, the State-Owned Enterprises Ministry and the Financial Services Authority (OJK). It also has to conduct a due diligence process and evaluate the prospective company before it can realize the plan.

In late December, BRI announced that it had acquired a 67 percent share in state-owned securities firm Danareksa Sekuritas. The lender also acquired a 35 percent share in asset management firm Danareksa Investment Management.

BRI corporate secretary Bambang Tribatoro said recently in a statement that the acquisitions of Danareksa Sekuritas and Danareksa Investment Management were aimed at realizing the lender’s ambition to provide an integrated financial service for its customers.

It also acquired a 97.61 percent share in venture capital firm BRI Ventura Investama (BRI Ventures), which was previously owned by state-owned venture capital firm Bahana Artha Ventura.

These acquisitions resulted in the bank’s three new subsidiaries engaging in the areas of securities, asset management and venture capital.

Aside from its inorganic growth plan, BRI expected to maintain its loan growth at around 12 to 14 percent this year, the same target it set for 2018, Suprajarto said.

“But the growth depends on our liquidity,” he explained, hoping that the bank’s liquidity would not be tightly squeezed this year.

As of the third quarter of this year, BRI recorded its loan-to-deposit ratio (LDR) at 93 percent, exceeding the lower end of the safety limit of 92 to 102 percent set by the OJK.

While there were concerns over liquidity, Suprajarto said BRI would still continue boosting its micro, small and medium-sized loans as it had been doing for years.

Consumer director Handayani said that as of the third quarter of 2018, BRI recorded that its micro, small and medium loan business accounted for 76.9 percent of its total credit business, resulting in a 16.5 percent year-on-year (yoy) growth in credit disbursement.

The loan increase, she said, helped the bank to book a profit of Rp 23.5 trillion by the end of the third quarter of 2018, up by 14.6 percent compared to the same period a year earlier.

“Our effort to focus on the micro and retail business segment, coupled with measures to maintain our operational cost and loan-loss provision at a low level helped us to boost our profit during the period,” Handayani said.

BRI in December signed a deal with Chinese digital payment platform Alipay, part of Chinese e-commerce giant Alibaba, to be its acquiring bank. It follows Bank Indonesia’s decision to allow merchants at tourist destinations to accept payment from visitors, particularly those from China, using Alipay and WeChat Pay.

Handayani said the deal was expected to support Indonesia’s tourism industry as many Chinese tourists had their own preferred payment methods. However, she said there was no exact schedule yet for the trial.

She added that BRI had yet to calculate the profitability from the deal as it was still preparing several things, including technicalities and permits.