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Indonesia's banking industry has yet to recover from its
recent slump, with major lenders still seeing a drop in profits amid
rising operational costs and weaker loan demand.
Bank Rakyat Indonesia (BRI), Bank Niaga, Bank Negara Indonesia (BNI)
and Bank Permata reported positive results for the year's third quarter.
Other major banks, including Bank Mandiri, Bank Danamon and Bank
International Indonesia (BII), reported lower profits despite enjoying
higher interest income.
State-owned BRI, Indonesia's fourth-largest lender by assets, reported
a 24 percent rise in nine-month profit until Sept. 30 from a year
earlier, on increased credit strength from its focus on small and
medium enterprises (SMEs) and the lower costs of funding for its
deposits.
After-tax profit increased to Rp 3.1 trillion (US$337 million), BRI
president Sofyan Baasir said, as the bank's net interest income (NII)
-- which refers to interest and dividend income, minus interest expense
-- rose 9 percent to Rp 10.2 trillion, on outstanding lendings
increasing 20 percent to Rp 86.7 trillion. Its net nonperforming loans
(NPL) ratio improved to 1.91 percent from 2.09 percent.
BRI's deposits increased by 24 percent to Rp 112.2 trillion,
contributing to a 24 percent increase in assets to Rp 140.5 trillion.
Its net interest margin (NIM) climbed to 11.34 percent and its
loan-to-deposit ratio (LDR) to 77.29 percent.
Private lender Niaga, meanwhile, reported a 23 percent profit rise to
Rp 537.8 billion. The country's seventh-largest lender, owned by
Malaysian Bumiputra-Commerce Holdings Bhd., saw its net interest income
rise by 30 percent to Rp 1.7 trillion on a 12 percent healthy increase
in lendings to Rp 31.1 trillion.
But it was a different story for state-owned Mandiri, Indonesia's
largest lender, which saw its profits slipping 3 percent to Rp 1.2
trillion, despite higher net interest income.
The lender's net interest income rose 10 percent to Rp 7 trillion.
Funding costs dropped despite a 4 percent rise in its deposits to Rp
194.5 trillion, Mandiri executive vice president Pahala Mansyuri said.
The bank's outstanding loans experienced a 1.8 percent growth to Rp
108.8 trillion.
Mandiri's NPL ratio, which has lately become a problem for the lender,
remained little changed at 14.33 percent. Its net interest income
improved slightly to 4.31 percent, but its LDR slipped to 53.5 percent.
Private lenders Danamon and BII, the fifth- and sixth-largest lenders
respectively, similarly saw a disappointing third-quarter result, with
Danamon's after-tax profits nearly halving to Rp 914 billion from Rp
1.9 trillion a year earlier. BII's profits fell 12 percent to Rp 517
billion.
Danamon increased its outstanding loans by 12 percent to Rp 40.9
trillion and its deposits by 21 percent to Rp 53.9 trillion, yet its
operational costs also increased on rising NPL. BII similarly upped its
loans by 18 percent to Rp 25.1 trillion, but also saw an increase in
its provision expenses for nonperforming loans.
BNI and Permata, the second- and eighth-largest lenders respectively,
had earlier reported a rise in profits. Yet BNI's results could be
deemed fortunate as its outstanding loans actually fell.
The central bank is cutting its key lending rate, which may help banks
reduce their funding costs and channel more loans. However, its high
inflation and interest rates continue to reduce the public's purchasing
power and ability to take out more loans.
Bank Indonesia (BI) governor Burhanuddin Abdullah also said recently
that lending and profit growth for the banking sector may further be
hampered if banks fail to reduce costly inefficiency in their operations.
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