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Bank Sumut looks to elevate business, credit class through initial public offering
Bank Sumut is set to make its debut on the Indonesia Stock Exchange on Feb.7 to become the fourth regionally owned bank listed on the bourse.
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T Bank Pembangunan Daerah Sumatera Utara (Bank Sumut) is looking to raise more capital through an initial public offering (IPO) to expand its business, elevate its status and strengthen corporate governance.
The bank, which is owned by the North Sumatra administration, announced on Monday that it planned to sell 2.9 billion primary shares, or 23 percent of its enlarged share capital, at Rp 350 (2 US cents) to Rp 510 per share on Feb. 7 on the Indonesia Stock Exchange (IDX).
In doing so, the bank is set to become the fourth regionally owned bank (BPD) listed on the stock market, alongside PT BPD Jawa Barat dan Banten (Bank BJB), PT BPD Jawa Timur (Bank Jatim) and PT BPD Banten (Bank Banten).
“We hope this IPO will grow our role and our company in supporting and pushing North Sumatra’s economy, strengthen public welfare and give value added to [our] shareholders and stakeholders,” Bank Sumut president commissioner Brata Kesuma said on Monday.
The lender plans to use 80 percent of the capital funds it raises through the IPO to expand its credit, from working capital loans and investment loans to consumer loans. The remaining 20 percent is to go toward expanding its branch offices and information technology development for digital banking services.
“Bank Sumut’s market share is only 10 to 12 percent, meaning the growth potential is still very [significant] in today’s financial ecosystem,” said Bank Sumut acting president director Hadi Sucipto.
Hadi said the bank’s 2022 net profit was Rp 706 billion, a 15.5 percent increase from Rp 613 billion in 2021. It also booked positive credit performance of Rp 27.85 trillion in 2022, up 10.58 percent from Rp 25.18 trillion in 2021.
The bank is targeting Rp 800 billion of net profit next year.
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The company reported total assets worth Rp 40.67 trillion and total equity worth Rp 4.3 trillion in the third quarter of 2022.
According to Financial Services Authority (OJK) Regulation No.12/POJK.03/2021, Bank Sumut’s total equity places the lender in the lowest of the four-tier bank classification by core capital (KBMI I).
The planned IPO is expected to bump up its classification to KBMI II, or banks with core capital of at least Rp 6 trillion, within a year or two after it goes public.
“This IPO is not intended to fulfill the minimum capital, because we have far exceeded it,” said Bank Sumut compliance director Eksir, referring to the mid-2022 OJK regulation requiring banks to have a minimum capital of Rp 3 trillion.
The bank initially announced it would go public in June 2022, but postponed its IPO until early 2023 claiming “administrative problems”.
Read also: New OJK leadership to focus on green economy, bank consolidation
Many speculated at the time that Bank Sumut’s IPO plan aimed to raise enough capital to fulfill the OJK’s minimum capital rule, and its subsequent postponement only strengthened the rumor.
