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rivate lender Bank Tabungan Pensiunan Nasional (BTPN) booked 15 percent credit growth in the first semester of this year, but its net profits dropped amid the tight liquidity environment and against the backdrop of the country'€™s trade deficit issues and slower economic growth.

BTPN, which is known to have been focusing on micro loans, announced on Monday that its lending had totaled Rp 50 trillion (US$4 billion) as of June, compared to Rp 43.6 trillion in the same period last year.

However, the lender posted a 10 percent drop in its net profits in the January-June period of this year, at Rp 996 billion compared to the same period a year earlier.

Commercial banks throughout the country have reported that their net interest margin (NIM) '€” the difference between interest rates charged on credit and those that need to be paid for customers'€™ deposits '€” has been squeezed due to the more limited cash supply.

'€œThe year of 2014 has become a period full of challenges for the banking industry. Conducting a bank'€™s intermediary function during times of economic slowdown is not an easy challenge,'€ BTPN president director Jerry Ng said in a statement.

Analysts have estimated that the tight liquidity would continue through the end of this year, with Bank Central Asia (BCA), the nation'€™s biggest private lender, saying that nationwide loan growth this year would be slower than policymakers'€™ expectations of between 15 percent and 17 percent.

Bank Indonesia (BI) has also cut the country'€™s economic growth forecast to 5.1-5.5 percent, from 5.5 -5.9 percent previously.

'€œIn anticipation of such conditions, BTPN is focusing on fundamental issues conservatively and prudently '€” the basic principles that are upheld by a bank in facing a situation like this,'€ Jerry said, adding that BTPN would try to pump up its cash supply to maintain the quality of its credit disbursement, as well as manage costs.

BTPN'€™s gross non-performing loan (NPL) ratio remained manageable at 0.9 percent, the company'€™s statement showed.

The lender aims to balance its funding allocation as it takes careful steps in disbursing loans.

BTPN'€™s third-party funds (DPK) '€” which include deposits and savings, among other elements '€” grew by 10 percent in the first semester of this year to Rp 52.7 trillion, while its loan-to-deposit ratio (LDR) could be maintained at the level of 95 percent.

'€œIf funding from bonds is taken into account, our liquidity ratio reached the level of 85 percent,'€ Ng said.

The moderate growth in credit and DPK contributed to the 12 percent increase in BTPN'€™s assets to Rp 71.4 trillion, he added.

Earlier in March, Japan'€™s Sumitomo Mitsui Banking Corporation (SMBC) completed the purchase of 40 percent of BTPN'€™s shares.

BTPN also finished the acquisition and conversion of Bank Sahabat Purba Danarta to a sharia bank in the second quarter of this year, which was later spun off into a sharia business unit.

Shares in BTPN traded at Rp 4,160 apiece in Monday'€™s closing session, unchanged from the previous day.

The stocks have dropped 3.2 percent so far this year, underperforming compared to the broader stock index'€™s 20 percent gain. (ask)