Publicly listed lenders Bank Negara Indonesia (BNI) and CIMB Niaga posted contrasting results in the first quarter of 2015, as shown in their latest financial results.

The state-owned BNI reaped Rp 2.82 trillion (US$217.72 million) in net profits between January and March, rising 17.7 percent year-on-year (yoy). The profit figure grew at a faster rate compared to the previous quarter, when it increased 15.6 percent.

BNI president director Achmad Baiquni attributed the positive performance to an improvement in its fee-based income, which saw annual growth surpass that of its net interest income.

According to the bank'€™s latest financial report, the fee-based income '€” generated from various service transactions '€” skyrocketed 23.8 percent yoy to reach Rp 2.94 trillion, whereas it only climbed 5.8 annually in the first quarter of 2014.

'€œOur insurance-related and trade finance businesses provided us with robust income and they will continue to be part of our fee-based income backbone in years to come,'€ Baiquni said in a press conference held on Thursday.

Thriving use of its electronic banking services played a role in the surging fee-based income as well, he said, adding that BNI expected the income to increase by 20 percent to 22 percent throughout the year.

It also recorded a 15.3 percent growth to Rp 6.1 trillion in its net interest income, resulting from various lending activities that climbed 9.1 percent yoy in the first quarter.

By the end of March, BNI'€™s outstanding loan portfolio stood at Rp 269.51 trillion.

The bank saw its lending activities decelerate during the first three months '€” from an annual pace of 23.3 percent a year ago '€” due to an overall slowdown in the economy that reduced credit demand.

BNI finance director Rico Rizal Budidarmo said that it was able to maintain net interest margin (NIM) above 6 percent amid credit deceleration. '€œOur costs of funds only climbed 0.4 percent, while our credit yield rose 1 percent. That gave us room to boost the NIM,'€ he said.

BNI, according to Rico, hopes to keep the NIM between 6 percent and 6.1 percent in 2015.

Meanwhile, bad loans became a bitter pill private lender CIMB Niaga '€” part of Malaysia'€™s CIMB Group '€” had to swallow.

According to its first quarter financial statement, the bank was forced to see its net profit drop 92.4 percent yoy, leaving the profit figure at Rp 83 billion.

CIMB Niaga strategy and finance director Wan Razly Abdullah said that in addition to slow credit growth, it continued to allocate high provision in the first quarter in an effort to minimize the impact of its previous bad loans.

'€œCredit growth is slow and we still take provision for coal and coal-related NPLs [non-performing loans],'€ he told The Jakarta Post in a text message.

The statement said that its loan provision jumped 80.6 percent on an annual basis to Rp 7.37 trillion in the January to March period.

As reported earlier, bad loans in the mining sector, especially coal, have been listed as one of the major contributors to CIMB Niaga'€™s declining asset quality.

Wan Razly said that it would monitor the current situation, at least until the first half. '€œThen we will look at Indonesia'€™s economic conditions. The economy is very slow for year-to-date,'€ he added.

Despite the poor yoy result, CIMB was able to slowly turn its profitability around on a quarterly basis. It ended 2014 with Rp 46 trillion in net profit and pushed it higher to Rp 83 trillion by the end of March.

Meanwhile, following the financial result announcements, BNI saw its shares climb 0.3 percent to
Rp 7,125 on Thursday on the Indonesia Stock Exchange (IDX), while CIMB Niaga posted a 0.6 percent increase in its share price to Rp 790.

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