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BCA, Mandiri book over Rp 10t profits in 2011

Indonesian lending giants PT Bank Mandiri (BMRI) and PT Bank Central Asia (BBCA) may have booked net profit breaking the Rp 10 trillion (US$1

Esther Samboh (The Jakarta Post)
Jakarta
Wed, March 7, 2012

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BCA, Mandiri book over Rp 10t profits in 2011

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ndonesian lending giants PT Bank Mandiri (BMRI) and PT Bank Central Asia (BBCA) may have booked net profit breaking the Rp 10 trillion (US$1.1 billion) mark for the first time thanks to strong lending and fee-based income, unaudited figures show.

The banks’ audited financial statements will be released within the week.

Mandiri’s bottom line jumped 30.8 percent to Rp 11.57 trillion in 2011 compared with a year earlier, while BCA’s was up by 21.91 percent to Rp 10.21 trillion during the same period, according to the banks’ unaudited financial statements published by regulator Bank Indonesia (BI).

Most of the nation’s top 10 banks have submitted audited financial statements for the year ending December 2011, seeing a surge in lending and consequently net profits as the steady overall economic growth of more than 6 percent in the past two years has increased demand for more financing.

There are concerns, however, that BI’s most recent policies which focus on bringing down lending rates could hurt banks’ profitability on declining net interest margins (NIM), which is the difference between lending rates charged to customers and interest rates banks pay to deposit holders, analysts said.

“Lending rates slide because of competition, especially corporate mortgage lending rates. Banks could maintain NIM by lowering deposit rates, but banks fear losing their deposit market share,” banking expert Mirza Adityaswara told The Jakarta Post.

Major banks, namely Mandiri, Bank Rakyat Indonesia (BBRI), Bank Internasional Indonesia (BNII) and Bank Tabungan Negara (BBTN) last month lowered their base lending rate in light of tight competition in the lending market.

Despite a 25.03 percent increase in lending to Rp 273.81 trillion, Mandiri’s net interest income (NII), which measures the amount of money banks receive from interest on assets minus the cost of servicing, grew by only 6.04 percent to Rp 19.15 trillion last year.

“Lower lending rates and declining recapitalization bond yields caused the smaller increase in NII,” Pahala Mansury, chief financial officer (CFO) of Mandiri, told the Post.

“The net profit increase was due to an increase in fee income, including provisions and commissions which are transactional in nature,” Pahala added.

State-run Mandiri, the country’s biggest bank by assets, saw a 20.93 percent increase in total assets last year to Rp 494.34 trillion. BCA’s assets rose 17.1 percent to Rp 378.65 trillion, the third largest after BRI, thanks to a significant increase in lending.

BCA’s lending soared 31.34 percent to Rp 202.27 trillion in 2011, driving up NII to Rp 16.87 trillion, a 25.15 percent jump from the previous year.

Shares of Mandiri and BCA remained unchanged on Tuesday’s trading, closing at Rp 6,500 and Rp 7,700 each.

The banks’ shares have slumped so far this year, dropping about 3.7 percent respectively as investors fear constrained margins due to the lower rates charged to consumers.

BCA’s market value of about Rp 187 trillion was the biggest among all of the nation’s banks. Mandiri’s market capitalization was at Rp 151 trillion.

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