INDONESIA: Late 2009 Target for OCBC’s Islamic Unit

By Yessar RosendarPT Bank OCBC NISP Tbk expects to launch a Shariah banking unit in the second half of 2009, with full operation expected to start next year in three branches in Jakarta, Surabaya, East Java Province, and Bandung, West Java Province. Parwati Surjaudaja, the bank’s president director, said on Monday that OCBC NISP, which is 74.73 percent controlled by Singapore’s OCBC Bank, had allocated Rp 100 billion ($8.7 million) for the Shariah unit and projected capital expenditures of Rp 2 billion to Rp 3 billion.
“The process is quite long,” Parwati told a press conference.
“We predict that it will take six months to prepare and probably will be fully operational next year.”
The Rp 100 billion to be injected is in line with a new central bank regulation on Shariah banking issued on Friday that requires a minimum capital level of at least that amount. The regulation also requires that Shariah directors and monitoring council members be approved by the central bank.
Parwati said that OCBC NISP’s Islamic banking unit would be the 20th launched in Indonesia and would be focused on developing consumer products.
Discussing the bank’s overall performance, Parwati said that tough macroeconomic conditions would probably limit 2009 credit growth to between 5 percent and 15 percent.
“That’s lower than last year’s target of 20 percent, the pace is slowing,” she said.
“We hope economic conditions will recover in the second quarter.”
OCBC NISP cut interest rates twice in February and is now offering consumer and commercial loans at between 14 percent and 15 percent. Parwati said the bank would try to lower rates further following Bank Indonesia’s recommendation that commercial lending rates fall to 12 percent, against the 7.75 percent BI rate.

(The Jakarta Globe, March 24, 2009)