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Indonesia BTN sees property prices, profits up in 2011

JAKARTA: Indonesia's top mortgage lender PT Bank Tabungan Negara (BTN) sees a government commitment to allow foreigners to own local property next year as an opportunity for aggressive expansion, the company's CEO said on Thursday, Dec 23.

Indonesia's property sector could attract between US$3 billion to US$6 billion (RM9.33 billion to RM18.66 billion) in new investment if parliament completes the passage of a law lifting restrictions on foreign property ownership in Southeast Asia's biggest economy, industry players say.

"I can see property prices jumping, especially in the cities, said said Iqbal Latanro, BTN's chief executive officer, in an interview at his 22nd floor Jakarta office, overlooking the presidential palace.

"The only problem for most Indonesians is low buying-power, but as the economy is growing and the central bank's rate still at its lowest level, then that problem is slowly lifting."

BTN, the smallest of four Indonesian state banks but the country's biggest mortgage lender, plans to open new 200 branches across the archipelago next year in a bid to attract more deposits, Latanro said.

BTN would seek to raise about two trillion rupiah (RM688.68 million) via bonds and one trillion rupiah through asset-securitisation to fuel the expansion.

"As the economy grows, consumption-type loans also flourish — especially for housing," said Latanro. "Therefore we have increased our loan growth target to between 20% to 30% next year, with asset growth about 15%-20%."

Latanro said BTN expects profits to jump about 50% next year.

The bank's 2009 net profit was 490.45 billion rupiah and is expected to hit about 790 billion rupiah in 2010 — up 60% this year and in line with forecasts by StarMine's SmartEstimate, a consensus that gives more weight to recent forecasts by top-rated analysts.

Latanro's 2011 profit forecast of 1.2 trillion rupiah, however, 50% up, is higher than StarMine's estimate of 1.1 trillion rupiah.

"We aim to maintain our net interest margin at around 5% to 6% next year amid tightening competition in the mortgage segment," he said.

Shares of BTN, which went public a year ago raising 1.9 trillion rupiah, have risen 94% this year — easily beating a broader market that is nevertheless up 40%.

Latanro, a 25 year veteran of BTN and avid golfer, also said the bank was in talks with several middle-eastern investors to develop its shariah unit.

Indonesia has been a darling of emerging market investors this year, although wariness remains over what steps the government may take to stop volatility caused by inflows of hot money into the debt and equity market. — Reuters
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