Publicly listed private lender PT Bank Mayapada will channel almost all of its Rp 528 billion (US$36.2 million) in net profit from 2019 into strengthening its capital as Taiwan-based Cathay Life Insurance prepares to increase its ownership stake in the lender.
Bank Mayapada decided to allocate 2.56 percent of its 2019 net profit, equal to Rp 13.5 billion, to meet its paid-up capital requirement as stipulated in Law No. 40/2007 on limited liability companies.
“Meanwhile, the remaining Rp 514.61 billion will be recorded as retained earnings to strengthen the company’s capital structure,” the lender wrote in a statement following its shareholders meeting on Thursday.
The decision not to provide any dividend payouts to its shareholders came after Bank Mayapada’s shareholders agreed to inject funds into the lender to strengthen its capital.
Bank Mayapada president director Hariyono Tjahjarijadi told The Jakarta Post on Monday that Cathay Life Insurance, a subsidiary of Cathay Financial Holdings, was preparing to increase its ownership stake.
The publicly listed insurance company now owns 37.33 percent of Bank Mayapada, making it the bank’s biggest shareholder, followed by PT Mayapada Karunia Corporation, which owns 26.42 percent of the total shares.
Bank Mayapada also received a deposit of Rp 1 trillion from its controlling shareholder in two injections of Rp 750 billion on July 1 and Rp 252 billion on April 24, according to a statement it issued on July 3, as published by the Indonesia Stock Exchange (IDX).
PT Mayapada Karunia channeled Rp 230 billion of the Rp 252 billion in April, while PT Mayapada Kasih funneled Rp 22.09 billion, according to a statement published on the IDX website on April 28.
“The fund placement strengthened [the bank’s] capital and is part of the company’s plan to carry out rights issues in 2020 worth a total of Rp 4.5 trillion,” the bank’s statement reads.
In the first quarter of this year, Bank Mayapada’s net profit plunged 44.52 percent to Rp 79.22 billion from Rp 142.78 trillion in the same period last year.
Its non-performing loan (NPL) rate stood at 6.94 percent as of March 31, up from 4.99 percent last year and above the Financial Services Authority’s (OJK) health threshold of 5 percent. The banking industry’s NPL rate, on the other hand, was 2.77 percent in March, showing an upward trend, as people’s purchasing power declined during the COVID-19 outbreak.
During a shareholders meeting on Thursday, Bank Mayapada shareholders also agreed to use Rp 626.03 billion of its Rp 997.33 billion rights issue proceeds in 2019 to expand credit. Meanwhile, the remaining Rp 371.3 billion will be placed in Bank Indonesia’s repo facility.
The meeting also agreed on remuneration for commissioners and directors, with a maximum of Rp 56.87 billion set, for the 2020 financial year.
As of Monday, Bank Mayapada’s shares, traded on the IDX under the code MAYA, had lost 28.57 percent of their value year-to-date (ytd). Over the same period, the finance sector experienced a 17.5 percent drop, while the benchmark Jakarta Composite Index declined 19.61 percent.
