Niaga books Rp 770b in net profit in 2007

Agustina Wayansari , The Jakarta Post , Jakarta | Fri, 02/22/2008 5:00 AM | Business

The country's sixth-largest bank by assets, Bank Niaga, recorded a total net profit of some Rp 770 billion (about US$83.7million) in 2007, or 19 percent higher than the 2006 total of Rp 648 billion.

President director Hashemi Albakri said in a press conference here Thursday that more credit applications had contributed significantly to the total profit amid the country's improving investment climate last year.

The central bank's decision to lower its benchmark rate from 9.5 percent to 8 percent last year allowed it to gain from a higher margin in its lending rate.

"Last year, we recorded our highest-ever net interest income, with Rp 2.45 trillion, up by 11 percent over the previous year," Hashemi said.

He added the gain had raised the bank's total assets to Rp 54.89 trillion and made it the sixth-biggest bank in Indonesia, after state-owned Bank Mandiri, Bank Central Asia (BCA), state-owned BRI, state-owned BNI and Bank Danamon.

Hashemi said the bank's total loans grew by Rp 8.6 trillion, or 26 percent, to Rp 41.75 trillion, while third party liability rose more than Rp 6 trillion, or some 15 percent, to Rp 45.2 trillion.

He said the bank would remain focused on retail loans, which contributed the most to the total credit last year at about 38 percent.

"Mortgage loans followed as the second-largest contributor with ... almost Rp 16 billion or 22 percent of the total credit," he said.

Niaga, Hashemi said, controlled about 10 percent of the total housing loans in the country.

Also speaking at the conference, corporate and banking business director Catherine Hadiman said this year the bank planned to team up with Malaysia based CIMB Bhd, which controls 83 percent shares in the bank, to finance palm oil plantations, the turnpike project in Greater Jakarta and power plant and manufacturing projects.

She said in 2008 corporate financing was expected to contribute to some 50 percent of total profit, treasury division to 30 percent and retail banking and credit cards to the remaining 20 percent.

In relation to the government's single presence policy whereby the government limits a bank shareholder to controlling interest in only one bank, Catherine said CIMB had the choice of either merging Niaga with Lippo Bank or building a new holding company covering the two firms.

CIMB's parent company Khazanah Nasional Bhd, owns a 93 percent stake in local bank Lippo Bank.

"We are currently still studying the prospects for a merger, calculating the commercial issues such as business expansion opportunities or losses that might occur. If (the merger) doesn't provide us with stronger business opportunities, we won't go for that option," said Catherine.

She said they were also reviewing the effect of tax regulations on a possible merger.

"Our committee is still studying the tax impact, which I believe is huge, and discussing other regulations with our consultant," she said.

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