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Indonesia's major lenders report slower profit growth

Publication Date : 30-04-2014


Indonesia’s major lenders Bank Negara Indonesia (BNI) and CIMB Niaga saw their net profit growth squeezed in the first quarter of this year from the same quarter last year amid what they called a “challenging” environment for the banking industry.

State-owned BNI announced on Tuesday that its bottom line grew by 15.6 per cent to 2.4 trillion rupiah (US$207.81 million) as of March this year compared to the same period a year ago. Throughout last year, the bank booked a 28.5-per cent profit growth.

“Our bottom line (profit) was held back by the economic slowdown,” BNI president director Gatot M. Suwondo said. Indonesia’s economy grew at the slowest pace in four years at 5.8 per cent last year.

BNI, however, still managed to grow its lending by 23.3 per cent as of March this year compared with the same period last year, to reach 247.1 trillion rupiah in outstanding loans.

On a quarter-to-quarter basis, however, lending declined 1.4 per cent in the first quarter this year from the fourth quarter last year, according to Gatot.

“[There are] ‘wait-and-see’ factors among investors and the under-realisation of some state budget projects,” he said.

Gatot added that BNI would remain watchful in expanding its lending business, given Bank Indonesia’s (BI) requirement that local banks have loan-to-deposit ratios (LDRs) of at least 92 per cent.

BNI’s LDR, which measures a bank’s liquidity and ability to expand its lending business, have been on the upward trajectory, rising to 88.4 per cent in the first quarter, compared to 82.6 per cent a year earlier. Gatot said he planned to push down the LDR to between 85 and 87 per cent.

The increase in LDR was attributable to tighter competition between Indonesian banks to collect third-party deposits, with BNI’s deposits growing by 12.8 percent, lower than the bank’s loan growth, to hit 274 trillion rupiah as of March.

Malaysian-owned CIMB Niaga, the fifth-largest lender in the country by assets, reported a 4.2-per cent rise in net profit from January to March this year to 1.1 trillion rupiah, slower than the 12 per cent profit growth in the same period last year.

The net profit growth in the first three months of this year was driven by a 9.5 per cent increase in lending to Rp 160.96 trillion.

Net interest income and non-interest income rose 3.9 per cent and 2.2 per cent, respectively, in the first quarter of this year from the first quarter a year ago to 2.53 trillion rupiah and 855 billion rupiah.

“The year 2014 will still be a year of challenges for the banking industry in Indonesia, with hopes that the second half of the year will be better than the first,” CIMB Niaga president director Arwin Rasyid said in a statement.

CIMB Niaga’s consumer loan segment was hit hard by the bleak global and domestic economy, the bank said in the statement. However, corporate loans were one of the fastest growing sectors, rising 12.7 per cent to 47.74 trillion rupiah as of March this year from March last year.

“We’re seeing a growth momentum in corporate loans this year as we anticipate a slowdown in consumer loan growth,” Arwin said.

Both CIMB Niaga and BNI’s lending quality were well-maintained with a gross non-performing loan (NPL) of 2.57 per cent and 2.3 per cent, respectively, as of March, well below the central bank’s minimum requirement of 5 per cent.


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