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ank Mega, a mid-size lender controlled by Indonesian tycoon Chairul Tanjung, says that its success of doubling its net profit to Rp 909 billion (US$96.35 million) in the first half of the year stemmed from the company’s decision to focus on credit disbursement to small and medium enterprises (SMEs).

The lender, which booked Rp 431 billion in net profit in the first half of 2011, says that credit disbursement for SMEs now accounts for 21.7 percent of its credit portfolio. In the same period last year, the SME segment accounted for only 9 percent, at that time the smallest compared to other segments such as commercial (12.9 percent), corporations (36.1 percent) and consumers (41 percent).

“The strategy [of shifting focus to the SME segment] has proven a success,” Bank Mega president director JB Kendarto told reporters at a breaking-of-the-fast event on Thursday evening.

“In the future, we will focus on disbursing credit to SMEs to optimize our function as financial intermediary to the Indonesian people,” he said.

Bank Mega, which was banned from opening new branches for a year since May 2011 by Bank Indonesia following a Rp 181 billion fraud case, in which one of Bank Mega’s branch heads was sentenced to six years in prison, will open 67 new branches this year.

A large fraction of its new branches will be located in less-developed areas of Indonesia so that the bank’s credit business can reach the huge, untapped potential of the SMEs segment, said Bank Mega chief operating officer J. Georgino Godong.

“We perceive the SMEs segment as more resilient to economic shocks,” he added.

Despite seeing higher net profit, Bank Mega also saw an increase in its gross non-performing loans (NPL) ratio to 1.44 percent from 0.96 percent a year earlier, indicating that the bank had more bad loans this year.

“If we focus on SMEs, I think there will be an increase in NPLs as a consequence. However, I think the figure of our NPLs at the moment is still at a manageable level,” Georgino said, referring to the fact that Bank Mega’s NPLs were still below the central bank threshold of 5 percent.

In the first half of this year, Bank Mega’s assets were valued at Rp 57.9 trillion, up 21.7 percent from last year. Its net interest margin (NIM), which is the difference between lending rate charged to customers and deposit rate, rose to 7 percent from 4.56 percent a year earlier, which Georgino attributed to Bank Indonesia’s historic low benchmark interest rate of 5.75 percent.

By the end of 2012, Georgino forecasts that Bank Mega will channel an additional Rp 39 trillion in credit, one-third of which is expected to come from the SMEs segment. In the first half of this year, the bank channeled Rp 31 trillion in credit, up 14 percent from the same period a year earlier.