Expansion of Bank Muamalat Indonesia (BMI) is expected to be accelerated as it will be supported by the strengthening of capital structure. Post-Annual General Meeting of Shareholders (AGMS) and Extraordinary General Meeting of the Shareholders (EGMS) held at end of June 2010, Indonesia's leading Islamic bank is currently focusing on the agenda of right issue.
The Company plans to raise capital with a maximum amount of Rp 1 trillion, while its trading period begins on July 13, 2010. BMI deems the rights issue as a necessity in order to balance the fast business expansion. During the year 2009, BMI recorded 27% in asset growth, above the average asset growth of the national banking that ranges from 10%. The progress of business is demonstrated from the growing of offices number and alliances. The offices number increased 62 units to 286 offices, while the post office alliance reached 4,000 units that previously amounted to about 3,000 units.
During 2009, occurred the slowdown of profits. However, this is more resulted from the increase of expenditure posts due to a relatively rapid extension. The Growth of expenses intended for profit sharing of Third Party Fund increased by 59%, while expansion of financing is only 8.7%. This causes the main operating revenues increased by only 14.8% so the net operating incomes declined 13% from Rp 805 billion to Rp 696 billion. The network expansion in both domestic and foreign as well as the physical renovation of offices also contributes to increase the General and Administrative costs amounted to 17% throughout 2009.
During the year 2009, the number of employees increased by about one-fifth of the previous year, mostly to offset the growth of new offices in various regions. This growth is also followed by the improvement of welfare and retention programs in order to anticipate the consequences of the increasing needs of industry. These subsequently increase the labor costs significantly by 38.4%.
Position of Non-Performing Financing (NPF) as of December 2009 is still below the maximum limit of Bank Indonesia (5%), which is 4.1%. However, in order to anticipate the risks, and as the implementation of prudential banking, BMI allocates greater reserves for productive assets with the increased costs by 65.1%.
EGMS has approved an increase in capital through new share offering maximally 820,251,749 shares with an exercise price of Rp 1,161 per share. "The issuance of new shares is very important for BMI for the purpose of business expansion to meet prospective market demand," said Arviyan Arifin, President Director of Bank Muamalat.
Additional capital has very strategic position to increase the Capital Adequacy Ratio (CAR) as well as to develop network that has spread throughout all provinces in Indonesia and in Malaysia. The new capital will also be utilized to improve the quality of infrastructure and information technology that will be accomplished in this year such as the addition of 150 ATMs, the capacity of core banking, network quality, the addition of various applications that support the retail products, and expansion of financing.
In addition, BMI continues to organize various programs to improve the quality of its human resources through various trainings such as internal controls, risk management, sharia compliance, marketing, service excellence, financing, legal, communication skills, negotiation skills, and managerial skills. "Improving the quality of human resources is expected to strengthen the position of BMI as a leading Islamic bank in Indonesia," added Arviyan.
This year, BMI targets the total assets to reach Rp 19.6 trillion or grows to 21% from the position in December 2009. The Third Party Fund is expected to reach Rp 15.6 trillion or grows to 17%, and the total financing to Rp 14.8 trillion, or grows to 30%. The achievement of these targets will be undertaken through the five priorities that are based on the principle of "Effective Implementation of Good Corporate Governance & Compliance.
As a pioneer and a leading Islamic bank in Indonesia, Bank Muamalat is always committed to deliver banking services that comply with sharia, competitive, and accessible, so the benefits can be provided to the entire communities. The commitment is appreciated by various parties through more than 70 prestigious awards including as the Best Islamic Bank in Indonesia in 2009 by Islamic Finance News (Kuala Lumpur), as the Best Islamic Financial Institution in Indonesia in 2009 by Global Finance (New York) as well as the Best Islamic Finance House in Indonesia in 2009 by Alpha South East Asia (Hong Kong). (hnf/hnf)