Danamon books healthy growth in first-half lending, profit

Novia D. Rulistia ,  The Jakarta Post ,  Jakarta   |  Fri, 07/18/2008 11:17 AM  |  Business

Publicly listed PT Bank Danamon Indonesia, the nation's fourth largest lender, recorded a 32 percent growth in lending in the first half of the year, compared to last year. Growth may slow, however, in the second half due to inflationary pressure.

President director Sebastian Paredes said Thursday that growth in lending has pushed net profits up by 14 percent to Rp 1.16 trillion (US$126.8 million), or Rp 229.81 per share, from Rp 1.02 trillion, Rp 204.87 per share, compared to the first half of 2007.

Outstanding loans at the bank, which is owned by Temasek Holdings Pte and Deutsche Bank, stood at Rp 61.2 trillion at the end of June.

"Most of the loans went to micro, small and medium businesses, as well as corporate and commercial wholesale customers," Paredes told a press briefing.

Turning to the second semester however, Paredes forecast slower growth in lending amid higher inflationary pressure and reduced purchasing power.

High inflation, triggered by the government's move to raise domestic fuel prices in May, could encourage the central bank to further increase its benchmark interest rate, making the cost of borrowing more expensive and eventually dampening loan demand.

Bank Indonesia's key interest rate currently stands at 8.75 percent, having previously fallen from 12 percent to 8 percent in the two years up to December 2007.

"We're still optimistic our lending can grow by 22 percent overall this year," Paredes said, on par with the lending growth target set by the central bank for the whole industry for 2008

Danamon's non-performing loans (NPLs) stood at 2.3 percent in the first semester, compared to 3.1 percent for the same period in 2007.

During January to June 2008, the bank's special new program -- Danamon Simpan Pinjam (combined savings and credit scheme) -- grew by 29 percent to Rp 9.5 trillion, accounting for 16 percent of total loans.

In the wholesale segments, Danamon disbursed Rp 9 trillion of loans to companies and Rp 8.7 trillion for commercial purposes.

Besides lending growth, the increased net profit also reflected higher interest income, which rose 20 percent to Rp 4.06 trillion in the first half-year, compared to Rp 3.38 trillion in the previous year.

The bank's sound performance was also supported by its financing unit, PT Adira Finance, which increased loans by 24 percent to Rp 14.8 trillion in the first six months of the year, compared to last year, thanks to a 29 percent growth in motorcycle financing.

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