Indonesia's Bank Muamalat plans rights issue in H2

JAKARTA- Indonesian Islamic lender PT Bank Muamalat is planning a rights issue in the second half of 2009 to raise its capital adequacy ratio (CAR), the bank said on Monday.
The bank -- whose total assets rose 20 percent to 12.67 trillion rupiah ($1.14 billion) last year -- said it aims to increase its capital adequacy ratio to about 12 percent in 2009 from around 10.8 percent last year.
"The lower CAR is the consequence of our financing growth in 2008...Although the central bank regulates a minimum CAR level of 8 percent, the management considers a CAR level of 12 percent is needed to become a good bank," M. Hidayat, a director at the bank, told reporters.
The official said the rights issue could take place in the second half of the year, but did not give a value.
Muamalat, majority owned by Islamic Development Bank (IDB), recorded a 39 percent rise in its operating profit to 308 billion rupiah in 2008. It also aims to increase financing by 10 percent this year, compared to 22 percent financing growth in 2008.
Indonesia's first sharia bank said it would maintain 60-70 percent of its financing disbursement to small and medium enterprises (SMEs), citing their ability to weather the current global crises.
Under sharia or Islamic law, interest is banned and income must be derived from a fundamental economic transaction such as trade in goods and services, direct investment in a business, or renting out property.
The world's most populous Muslim country, however, has lagged behind neighbours Singapore and Malaysia in developing its Islamic finance industry. Around 85 percent of the population of 226 million people is Muslim.
The central bank said on its website (www.bi.go.id) its target for sharia banking was for total assets of 50 trillion rupiah and 87 trillion rupiah in 2008 and 2009 respectively. As of November, total assets for sharia banking stood at 47.2 trillion rupiah.