T

he nation’s commercial banks posted Rp 57.31 trillion (US$6.42 billion) in net profits in 2010, a 27 percent increase compared with theRp 45.21 trillion netted a year earlier, Bank Indonesia’s (BI) latest data shows.

The growing profits were in line with lender loan disbursements throughout 2010, which reached Rp 1,765.84 trillion, up 23 percent compared with 2009’s Rp 1,437.93 trillion, according to data released Monday.

Despite the rapid growth in loans, which spurred the country’s economy to grow 6.1 percent last year, economists have said Indonesia needs even more loan disbursements in order to support the expansion of Southeast Asia’s largest economy.

Noted University of Indonesia economist Faisal Basri wrote on his Twitter account Tuesday that the country’s ratio of private loans to gross domestic product (GDP) was “only 22.8 percent, far lower compared with India [48 percent], Thailand [78 percent], Vietnam [90 percent] and Malaysia [96 percent]”.

Third party funds grew slower at 18.5 percent compared with loan growth, which was Rp 2,338.82 trillion at the end of December versus Rp 1,973.04 trillion a year earlier.

According to Faisal, Indonesia’s ratio of bank deposits to GDP was also lower than its neighbors at 34 percent.

“India’s is at 63 percent, Vietnam’s at 74 percent, Thailand’s at 84 percent and Malaysia’s at 109 percent,” he said, adding that the weakness of the nation’s financial sector hampered the acceleration of the overall economy. Increased loan growth compared with third party funds brought banks’ nationwide loan-to-deposit ratio (LDR) to 75 percent compared with 73 percent in 2009. Meanwhile, the net interest margin (NIM) increased to 5.7 percent from 5.6 percent the year before.

The assets of the nation’s 122 banks were Rp 3,008.85 trillion at the end of December, a 20 percent increase compared with 2009’s Rp 2,543.11 trillion. The capital adequacy ratio stood at 17 percent at the end of last year.