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ublicly listed Bank Central Asia (BCA), the nation'€™s third-largest lender, booked higher profit growth in the first half of this year than in the same period a year ago thanks to strong interest income and margins, despite slower loan growth.

BCA'€™s net profits jumped 24.2 percent year-on-year to Rp 7.85 trillion (US$682.1 million) in the first half, whereas a year before, the growth rate only stood at 19.3 percent.

The bank'€™s outstanding loans grew by 14.6 percent to Rp 321.28 trillion, compared with 24.1 percent growth recorded a year ago.

'€œWe disbursed quite a lot of loans throughout the second half of 2013, the profits on which we began to reap in this year'€™s first half,'€ BCA president director Jahja Setiaatmadja said.

Jahja attributed the bank'€™s strong profits achievement to higher growth in its net interest income and a rising net interest margin (NIM) '€” which is the difference between lending rates and deposit rates '€”, even though all of its lending segments actually recorded slowdowns in the January-to-June period.

Net interest income increased 25.6 percent to Rp 15.43 trillion and NIM was up 50 basis points (bps) year-on-year to 6.5 percent, BCA'€™s financial report showed.

Given the current slowdown in the domestic economy, Jahja forecast that BCA would be unable to increase its NIM further and it would most likely miss its 2014 lending-growth target.

'€œWe will probably achieve only 8 to 10 percent growth in loans, lower than the 15 to 17 percent target set by financial regulators,'€ he said.

The financial report also revealed that BCA posted 11.3 percent growth to Rp 421.19 trillion in its third-party funds (DPK) by the end of June. The growth rate was slightly higher than the 10.9 percent it achieved in the first six months of 2013.

Low-cost funds '€” consisting of savings and demand deposits '€” continued to make up the largest part of the DPK at 77.2 percent.

Even though low-cost funds dominated the DPK, it was time deposits that recorded the highest growth, soaring 32.4 percent, when just a year ago, they were down 4.7 percent.

'€œOur current pricing is already attractive enough for customers. At the moment, our highest rate revolves at between 9.25 percent and 9.5 percent for customers with funds of over Rp 10 billion per person,'€ he said, adding that BCA had no plans to increase the funding rate.

Meanwhile, Bank Permata '€” jointly owned by diversified conglomerate Astra International and Standard Chartered Bank '€” reported a 2.2 percent decline in net profits to Rp 800 billion in the first half.

Permata'€™s lending and DPK grew 19 percent to Rp 127 trillion and Rp 138 trillion, respectively, in the first half of 2014. Both segments grew at a slower rate than the year before.

Its net interest income grew at a much slower rate, at only 5 percent year-on-year to reach Rp 2.7 trillion, whereas in 2013,income surged 12 percent. Permata'€™s NIM was compressed as well during the period, down to 3.5 percent from 4.4 percent.

The bank said the compressed NIM was a result of higher cost of funds, reflecting the general increase in interest rates and strong competition for funding.

Shares in BCA traded at Rp 11,625 at close of trading on Wednesday, with the stock up by 21 percent so far this year, in line with the broader stock index'€™s 19 percent gain. Permata, on the other hand, has seen its shares rise by 9.5 percent this year.