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Bank Mega sees 40% increase in profit
Publicly listed Bank Mega is projecting a net profit of Rp 732 billion (around US$79
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Publicly listed Bank Mega is projecting a net profit of Rp 732 billion (around US$79.6 million) this year on the back of estimated higher growth in lending.
This represents an increase of 40.7 percent on last year's profit of Rp 520.7 billion.
President director Yungky Setiawan told reporters Monday the bank was optimistic it would achieve the target because third-party funds were likely to increase, fueling the bank to channel more loans.
"Third-party funds are expected to increase by up to Rp 35.1 trillion this year, higher than last year's Rp 30 trillion," he told a media conference.
He said Rp 8.5 trillion of the expected third-party funds would come from accounts, Rp 7.8 trillion from savings and Rp 35.1 trillion from term deposits.
Third-party funds are the cheapest source for banks to reap high profits from loans because of the disparity between interest rates for third parties and those for borrowers.
Yungky said the bank was expecting to see a rise in lending this year of about 39 percent, up to Rp 19.5 trillion from Rp 14.03 trillion in 2007.
"The biggest proportion of lending will still go to the corporate sector, followed by the commercial sector and consumers, which is mostly used for mortgages," he said, adding the bank would soon disburse Rp 400 billion for infrastructure projects.
Last year, the mid-size Bank Mega recorded a leap in net profit of 243.3 percent from Rp 151.7 billion in 2006, primarily because of higher lending growth and lower costs of funds.
According to Yungky, loans for the corporate sector reached Rp 6.5 trillion last year; commercial loans reached Rp 2.13 trillion and consumer loans reached Rp 1.8 trillion.
The bank's nonperforming loans in 2007 stood at 1.53 percent, down from 1.68 percent in 2006.
The bank will set up another 90 branch offices this year with a total investment of up to Rp 540 billion.
The bank, founded by tycoon Chaerul Tanjung, now has 160 branches.
