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One of Indonesia's leading banks, Bank Rakyat Indonesia, is planning to conduct a 1:5 stock split in order to make its stocks more affordable and increase their liquidity. At the general shareholders meeting, to be held on 18 October 2017, the plan is expected to be approved by the company's shareholders.
Suprajarto, President Director of Bank Rakyat Indonesia (BRI), hopes that the stock slip will attract more retail investors as the share price becomes more affordable. On Wednesday (27/09) shares of BRI fell 1.93 percent to IDR 15,250 a piece, which is a relatively high share price, while the rising amount of small retail investors have limited budgets available. After the stock split the share price of BRI will probably be slightly above IDR 3,000 a piece.
The stock split should also boost BRI's market capitalization. Currently, the state-controlled lender is the fourth-biggest company listed on the Indonesia Stock Exchange (IDX) in terms of market capitalization. At the moment Bank Central Asia (BCA) - one of the biggest rivals of BRI - leads this ranking.
As in terms of stock trading there also exists fierce competition between the leading banks of Indonesia, the stock split would indeed make BRI's shares more competitive. Earlier this month (13/09) state-controlled Bank Mandiri had already conducted a 1:2 stock split for the same purpose (affordability & liquidity).
Reza Priyambada, analyst at Binaartha Sekuritas, said BRI's price-to-book value has already exceeded 2.5 times, while the average figure for the banking sector of Indonesia is 1.68 times. Thus, BRI's shares should become more appealing after the stock split.
Stock Quote Bank Rakyat Indonesia - BBRI: