Three of Indonesia’s big banks kept growing in the first quarter of this year despite the global financial crisis, posting increases in their net profits on the back of higher incomes and lower costs.
Bank Mandiri, Bank Central Asia (BCA) and Bank Negara Indonesia (BNI), all publicly listed and with assets accounting for 30 percent of the country’s total banking assets, showed solid growth in their latest financial reports due to increased revenue from net interest earnings as well as fee-based income.
Net interest earnings are calculated from bank interest collected after deducting interest paid to customers, while fee-based incomes are revenues from transaction services.
The country’s fourth largest bank, BNI, is the best performer in this year’s first quarter, posting a 315-percent increase in net profits to reach Rp 635 billion (US$59 million) from Rp 153 billion a year earlier.
The huge jump was attributable to the 24 percent growth in the bank’s net interest margin and 44 percent jump in fee-based income, to Rp 2.77 trillion and Rp 1.21 trillion, respectively.
BNI said in a statement sent to The Jakarta Post that success in cutting operational costs contributed to increased net profits.
BCA net profits jumped by 41.8 percent to Rp 1.6 trillion.
BCA said that its net interest margin surged 51 percent to Rp 3.9 trillion and its fee based income jumped 31.9 percent to Rp 1 trillion.
Mandiri, the largest bank by assets in Indonesia, meanwhile, only saw its net profit slightly increased by 0.8 percent to reach Rp 1.4 trillion during the period, as it sets aside huge provisions for bad loans.
The value of Mandiri’s provision funds soared 346 percent to Rp 1.375 trillion in the first quarter of this year as compared to Rp 308 trillion in the same period last year.
Mandiri chief financial officer Pahala N. Mansury said that the huge amount of provisions was allocated to maintain the bank’s ratio of non performing loans (NPLs) at the level below 5 percent as required by the central bank.
Mandiri’s NPL ratio increased by 11.5 percent to 1.46 percent in the first quarter this year as the global economic crisis affected people’s ability to repay loans.
BCA suffered similarly with its NPL ratio jumping by 100 percent to 1.6 percent from 0.8 percent.
BNI is the only bank that improved its NPL ratio to 1.5 percent from 3.2 percent previously.
Due the jump in its NPL ratio, BCA adopted conservative objectives for this year’s lending growth, targeting a 15 percent rise despite previous solid growth.
“We want to stay prudent in channelling loans amid the current situation,” vice president director BCA Jahja Setiaatmadja told The Jakarta Post Wednesday. (mrs)