(Left to right) Director of International Grand Investment Corporation Arvind K Agarwal, GM of BBNI Branch Office of Foreign Affairs New York Oswald JM Tambunan, Deputy General Manager of BNI Branch Office of Foreign Affairs New York Rachmat Hidayat, and Director of Treasury & International BNI Rico Rizal Budidarmo at the signing of the loan facility between the bank and CPP in Washington, Monday (23/07) - Photo by BBNI
JAKARTA (TheInsiderStories)–Publicly listed’s PT Bank Negara Indonesia Tbk (IDX: BBNI) give financing facility US$100 million to United State’s (U.S) pulp & paper producer Cascade Pacific Pulp LLC (CPP), the lender announced on Tuesday (24/07). This is for the first time the bank has provided loans to foreign companies abroad.
The financing is marked by the signing of the loan facility between BBNI and CPP in Washington DC, USA, on Monday (23/07) local time. The signing was attended by Director of Treasury and International BBNI Budidarmo Rico Rizal, Director of International Grand Investment Corporation Arvind K Agarwal, and General Manager of BBNI New York JM Oswald Tambunan.
It said, the financing facility will be channeled through the bank’s branch office in New York to improved the financial performance of companies through investment funds. This financing also to help the company run the program increase plant production capacity and working capital.
Rizal said that the financing facility is one of BBNI‘s commitment to work together with the government’s strategy in an effort to maintain a sufficient supply of raw material production in the country. The production of pulp from CPP absorbed by some Indonesian companies who need this type with the characteristics of long fiber pulp for tissue paper and cloth-making raw material mixture, where the results of the production will be exported to other countries.
“The provision of this facility also marks the BBNI sustainability in project finance Pulp and Paper through its foreign branch network and this is the third project in the last three years,” he said in a written statement received by TheInsiderStories.
Rizal expected in the future the bank will be able to open new cooperation opportunities with other business entities in the U.S and also entered into the global market with priority for the business concept of supply chain or value chain, in order to encourage economic growth in Indonesia.

In the First Quarter (1Q) of 2018, BBNI recorded a net profit of Rp3.66 trillion (US$252.41 million), up 13.3 percent compared to the profit in the 1Q 2017 worth of Rp3.23 trillion. Its loan increased by 10.8 percent compared to the same period in 2017 from Rp396.52 trillion to Rp 439.46 trillion. Net Interest Income in the 1Q of 2018 amounted to Rp 8.5 trillion, or grew 9.5 percent from a year ago.

This month, Moody’s Investors Service released the rating of nine Indonesian banks following the latest global economic conditions. The rating agency assigned Counterparty Risk Ratings (CRRs) to nine Indonesian banks.

The affected banks are PT Bank Rakyat Indonesia (IDX: BBRI), PT Bank
Mandiri Tbk (IDX: BMRI), PT Bank Central Asia Tbk (IDX: BBCA), BBNI, PT Bank Tabungan Negara (IDX: BBTN), PT Bank CIMB Niaga Tbk (IDX: CIMB), PT Pan Indonesia Bank Tbk (IDX: PNBN), PT Bank Danamon Indonesia Tbk (IDX: BDMN), and PT Bank Permata Tbk (IDX: BNLI).

For Mandiri and BBNI, the deposit ratings are already at the level of the sovereign rating of Baa2 with a stable outlook. As such, Moody’s could
upgrade the banks’ ratings, if Moody’s upgrades Indonesia’s sovereign
rating.

And, Moody’s could upgrade the banks’ BCAs if the banks demonstrate an improvement in their asset quality, supported by continued strength in their loss-absorbing buffers, including loan-loss reserves and core capital.

For BBRI and Bank Central Asia, their deposit ratings are already
at the level of the sovereign rating of Baa2 with a stable outlook. As such, Moody’s could upgrade the banks’ ratings and BCAs if Moody’s upgrades the sovereign rating, and their credit fundamentals remain robust and reflect stabilizing asset quality and strong capitalization.

For BBTN, CIMB Niaga and BDMN, their deposit ratings are already at the level of the sovereign rating of Baa2 with a stable outlook. As such, Moody’s could upgrade their ratings if Moody’s upgrades the sovereign rating.

And, Moody’s could upgrade the bank’s BBCAs if they demonstrate an improvement in their asset quality, loss-absorbing buffers — including loan-loss reserves and core capital — as well as a sustained improvement in funding, as reflected by track records of lower deposit funding costs.

For Panin and Permata, Moody’s could upgrade the banks’ deposit ratings
and BCAs, if they demonstrate improvements in their asset quality, loss-absorbing buffers — including loan-loss reserves and core capital — as well as improvements in funding.

Furthermore, Moodys said, for BRI, Mandiri, Bank Central Asia, BNI, BTN, Moody’s could downgrade the banks’ Baa2 deposit ratings if Moody’s downgrades the sovereign rating. For CIMB Niaga and BDI, Moody’s could downgrade the banks’ Baa2 deposit ratings if Moody’s downgrades the sovereign rating and the banks’ adjusted BCAs.

And, Moody’s could downgrade these banks’ BCAs, if their financial fundamentals deteriorate significantly. If all other rating factors are constant, their BCAs would come under adverse pressure if they report a continued increase in problem loans — including nonperforming and restructured loans — or a material decline in core capital ratios and/or profitability.

For Panin and Permata, Moody’s could downgrade the banks’ deposit ratings
and BCAs if their financial fundamentals deteriorate significantly. If all other rating factors are constant, their BCAs would come under adverse pressure, if they report a continued increase in problem loans — including nonperforming and restructured loans — or a material decline in core capital ratios and/or profitability.

CPP is a producer of pulp mills operating in Oregon USA which has a production capacity of 205,000 tons per year.
Email: linda.silaen@theinsiderstories.com