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PT Bank Central Asia is aiming to acquire a motorcycle financing company by 2011 to reach out to the lucrative consumer market.

“We will provide technical assistance and joint financing first — that will take one year or one and a half years” before acquiring the company, chief executive Djohan Emir Setijoso said in a television interview on Thursday. He didn’t name the target company.

“We have a car financing business already. It is well established now,” Djohan said, referring to the company’s majority stake in PT BCA Finance. “This motorcycle financing would be second.”

“Bank Central Asia knows it needs to reach out to consumers as that’s a more dependable business for them than lending to companies or to small and medium-sized enterprises,” said Henry Pranoto, an analyst at broker PT Andalan Artha Advisindo Sekuritas.

The central bank gave Bank Central Asia a license to operate a Shariah bank last week, Djohan said. Bank Central Asia bought control of PT Bank UIB for Rp 248.3 billion ($27 million) last year and turned it into a Shariah bank.

“The Islamic bank would be for the mass market. That is the big potential,” Djohan said.

“Bank Central Asia does not do micro-lending,” he added.

Islamic law, or Shariah, bans the payment and receipt of interest and forbids investment in tobacco, alcohol and gaming businesses. About 85 percent of Indonesia’s 238 million people are Muslims, making it the world’s most-populous Muslim nation.

The country’s biggest banks are seeking smaller financing firms to consolidate operations and sustain growth.

The central bank has prodded the nation’s 121 banks to combine and boost capital after it spent Rp 450 trillion on bailouts following the 1997-98 Asian financial crisis.

PT Bank Mandiri, the country’s largest bank by assets, took control of PT Tunas Financindo Sarana, a car financing company, last year.

Indonesia’s economy is forecast to expand by 5.6 percent this year after weathering the global financial crisis, Bank Indonesia deputy governor Hartadi A Sarwono said last week.

The country’s $514 billion economy expanded by 4.5 percent in 2009.

Lower borrowing costs may boost consumer spending, which accounts for more than two-thirds of the economy.

The central bank cut its benchmark interest rate by 3 percentage points between December 2008 and August 2009 in an effort to shield the country from the worst effects of the global recession.

The policy rate has since been maintained at 6.5 percent.



Bloomberg