JAKARTA: Private lender Maybank Indonesia plans to issue subordinate bonds in 2016 as part of efforts to raise capital and boost credit growth, its executives say.
Maybank Indonesia finance director Thilagavathy Nadason said in Jakarta here the other day that the lender expected to raise Rp 1 trillion (US$72.3 million) to Rp 1.5 trillion from the issuance of the subordinate bonds, also known as subdebt.
“If all goes to plan, the issuance will probably take place in the second quarter or in the first half, of 2016,” Nadason said after a public expose.
Fresh funds to be raised from the debt paper issuance, she said, would be used as additional capital
to help maintain the bank’s capital adequacy ratio (CAR) within the range of 14 percent to 14.5 percent next year.
The bank, part of Malaysian financial group Malayan Banking Berhad (Maybank), posted 14.89 percent in consolidated CAR as of September, rising from 14.11 percent in the same period last year.
Nadason said the lender, which recently changed brand from Bank Internasional Indonesia (BII), expected that the CAR would also be boosted by a plan to revalue the bank’s assets either before the end of this year or in the first quarter of 2016.
Asset revaluation is part of a government-sponsored program outlined in the fifth economic policy package released earlier this year.
“We’ve already appointed an external appraiser to conduct the asset revaluation, but we are still discussing the details with the Financial Services Authority [OJK],” Nadason said, adding that the bank’s last asset revaluation had been in 2003.
According to Nadason, the bank will only revaluate its buildings and land properties, with the revaluation expected to boost the bank’s asset value by 150 percent.
As reported earlier, the government is offering a tax cut for companies and individuals wishing to revalue their assets to allow them greater leverage in accessing external financing.
Revaluation of fixed assets such as buildings and land can help banks recalculate their CAR, thus giving them higher lending capacity.
The asset revaluation facility is offered in several stages, with the tax rate set at 3 percent before the year’s end, 4 percent from January 2016 to June 2016 and 6 percent from July 2016 to December 2016.
Maybank Indonesia posted Rp 153.9 trillion in total assets as of September, an increase of 6.5 percent from the Rp 144.5 trillion recorded in the same period last year.
With a maintained level of CAR, Nadason said the bank expected that its loans could grow by 12 percent next year, the growth mainly spurred by more credit given to small and medium-sized enterprises (SME) and the retail banking segment.
“By the end of this year, our loans will probably reach around 6 or 7 percent, not far off the 6.6 percent year-on-year growth as of September to Rp 111.5 trillion,” Nadason said, adding that the bank would remain cautious with its loans to the corporate segment.
