BTN bond volume raised to IDR1.65 trillion

Wednesday, 02/06/2010 00:00 WIB

BTN bond volume raised to IDR1.65 trillion

Irvin Avriano A.

Bisnis Indonesia

JAKARTA: PT Bank Tabungan Negara Tbk (BTN), the biggest mortgage loan provider, raises its bond XIV/2010 value to IDR1.65 trillion from IDR1.5 trillion initially targeted.

One Bisnis source added the company had bolstered the 10-year bond value since the subscription reached IDR3.3 trillion.

"The bond value will reach up to IDR1.65 trillion due to an oversubscription of up to IR3.3 trillion," he told Bisnis recently.

Record by Bisnis shows the bank has fixed the bond coupon at 10.25%, relatively lower compared to other bonds of the same tenure.

BTN President Director Iqbal Latanro and BTN Director Saut Pardede confirmed the raised bond value.

"It is true that the value is raised to IDR1.65 trillion. The listing in the bourse is a little bit long since the bank is focusing on the shareholders general meeting," said Saut.

BTN has named PT Mandiri Sekuritas, PT Bahana Securities, and PT Indo Premier Securities to underwrite the 10-year bond.

This year, the management of BTN promises to cut lending rate in the second semester f 2010.

Fund target

President Director of BTN Iqbal Latanro exposed BTN targeted cheap funds, namely savings and demand deposits, to represent 33.5% of the total fund, while expensive funds, namely time deposit, were targeted to account for 66.5% of the total fund.

In the meantime, per March 2010, cheap and expensive funds represented 31.4% and 68.61%, respectively, of the total third-party fund of IDR37.9 trillion.

"This is our strategy to cut lending rate to attract people to use our housing loan facility."

According to him, an increase in cheap funds would lower BTN's cost of fund.

This year, BTN has lowered interest rate twice, namely by 50-100 basis points in March 2010 and 50 basis points in April 2010.

In 2009, the bank cut interest rates five times. The bank's interest rates currently hover at 9%-11%. As of the end of March 2010, BTN had been able to lend IDR43.1 trillion, rising 28.6% from IDR33.5 trillion as of the end of March 2009.

Iqbal added the high lending in the first quarter was attributable to the lower lending interest rates.

"The lower interest rates make customers have higher capacity to pay loan installments, bolstering the market and boosting demand."

At the Limited Shareholders General Meeting in the middle of last month, the shareholders approved to pay a dividend of IDR220.95 billion or IDR15 per share, representing 45% of IDR491 billion in the 2009 net profits.

Iqbal said BTN's dividend payment was higher than other state lenders due to the latter's small earnings. He added the dividend was up from 2008, when BTN only paid 10% of their net profits as dividend or IDR43 billion. (Bisnis/iaa/faa)