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tate lenders Bank Mandiri and Bank Negara Indonesia (BNI) managed to post double-digit growth in their net profits amid a slowdown in the domestic banking industry, as shown by their financial reports.

Mandiri, the country'€™s largest lender by assets, booked a 15.6 percent increase in its net profit to
Rp 9.58 trillion (US$828.09 million) during the first six months of 2014 compared to the same period last year, thanks to increases in net interest income and net interest margin (NIM).

According to its first-half report, the net interest income rose by 19.6 percent to Rp 18.1 trillion and its NIM was up to 5.7 percent from 5.3 percent. NIM is commonly used to measure the difference between earnings generated from lending interest and expenses paid for funding interest.

Mandiri president director Budi Gunadi Sadikin attributed the higher NIM to low-cost funds that dominated its total third-party funds (DPK) portfolio.

'€œBy having 60 percent of the DPK in the form of low-cost funds, we were able to pay relatively lower costs of funds and boosted NIM,'€ Budi said on Thursday.

Mandiri'€™s DPK grew 10.7 percent to Rp 555.92 trillion, while its lending grew 13.3 percent to Rp 458.8 trillion.

Budi said Mandiri would maintain its overall lending growth at between 15 percent and 17 percent this year, in line with the guideline set by financial regulators.

'€œBut we are looking at a lower funding growth as we have revised our initial target to 16 percent from the previous 18 percent,'€ he added.

Meanwhile, fourth-largest lender BNI saw its bottom line climb 15.4 percent to Rp 4.94 trillion during the first six months of 2014.

That compares with a 30.2 percent surge in its profits a year ago, with BNI president director Gatot M. Suwondo pointing to lower NIM. By the end of June, BNI'€™s NIM was recorded at 6 percent, down 20 basis points from the same period in 2013.

The banking industry began to suffer from compressed NIM late last year as a result of tight monetary policy, but BNI would try to keep its NIM at around 5.7 percent to 6 percent, Gatot said.

'€œIf we look at the current banking industry, 6 percent [in NIM] is already good for us,'€ he said at a media briefing.

Throughout the first half, BNI'€™s outstanding loans increased 15.7 percent to Rp 257.53 trillion and its DPK rose 19.1 percent to Rp 314.2 trillion.

According to the financial report, the food and beverage, agriculture and chemical sectors have increased their contributions in BNI'€™s lending portfolio from previous years.

Contrary to Mandiri and BNI, CIMB Niaga, part of Malaysian lender CIMB, announced that its net profit dropped 8.5 percent year-on-year to Rp 1.95 trillion in the first six months of 2014.

In a statement, the bank attributed the result to slower growth in net interest income and a decline in its fee-based income. (ask)