UPDATE 2-Indonesia's BNI suffers Q4 loss on loan provisions

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JAKARTA, March 31 (Reuters) - Indonesia's PT Bank Negara Indonesia Tbk (BNI) (BBNI.JK), posted on Monday an unexpected net loss in the fourth quarter of 2007, hit by larger provisioning against bad loans.

The loss comes in an industry where banks have been aggressively lending to businesses and for infrastructure projects, pushing loan growth up by 25.5 percent last year, compared with a 14 percent rise in 2006.

The bank, Indonesia's fourth largest, was tightening its provisioning as a precaution, recently appointed BNI President Director Gatot Suwondo said.

"In the past three years, loan provisions were between 50-55 percent. In 2007, we lifted them to 72 percent as we anticipate more vulnerable global economic conditions ahead," Suwdono told a news conference, adding that the bank was targeting 100 percent provision coverage this year.

BNI, which has a market capitalisation of $2.4 billion, said it aimed to book 20 percent growth in loans in 2008 from outstanding loans of 88.65 trillion rupiah last year.

"The fastest growth engine this year would be small- and medium-enterprise banking and consumer banking," Suwondo said, adding that loans to SMEs were expected to grow 22-25 percent while consumers loans were projected to rise 20-22 percent.

The state bank had a fourth-quarter net loss of 657.8 billion rupiah ($71.50 million), compared to a 520.99 billion net profit a year ago, based on the company's full-year results and published nine-month earnings.

Analysts polled by Reuters Estimates had forecast a full year net profit of 2.01 trillion rupiah, implying a fourth-quarter forecast of a 458.9 billion profit.

The bank's net interest income climbed 18.4 percent to 2.08 trillion rupiah in the October-December period, according to Reuters calculations.

BNI reported in a statement on Monday a worse-than-expected 53.4 percent fall in its 2007 net profit, while its net interest income rose by only 1.2 percent to 7.47 trillion rupiah.

The bank's net interest margin fell to 4.99 percent as of December compared to 5.19 percent a year earlier, far below an industry average of 8.9 percent in 2007 according to central bank data.

The higher loan provisions pushed its net-non performing loans ratio lower to 4 percent last year from 6.6 percent a year earlier.

BNI's shares fell 1.5 percent in the fourth quarter, underperforming a 16.4 percent rise in the overall composite index .JKSE and compared with a 5.7 percent fall in the financial sub-index .JKFINA of the Indonesia Stock Exchange.

On Monday, BNI shares was trading 0.69 percent lower at 1,440 rupiah each, while the overall market fell 0.9 percent.

The shares trade at around one time its 2008 book value, much lower than the average of 2.5 times for the country's top five lenders. ($1 = 9,200 rupiah) (Writing by Harry Suhartono, editing by Ed Davies & Louise Heavens)