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rivate lender Bank Mayapada International expects a hefty growth in net profits this year despite the country'€™s economic slowdown having caused a decline in lending growth in the banking system.

Bank Mayapada president director Haryono Tjahjarijadi said that given encouraging profit growth in the first five months of the year, he was confident that net profits would increase by 49 percent to Rp 650 billion (US$48.8 million) this year, up from about Rp 435 billion in 2014.

'€œWe are optimistic about realizing our net profit target of Rp 650 billion because as of May we have recorded Rp 350 billion,'€ he said after a shareholder meeting on Tuesday.

Bank Mayapada posted Rp 97 billion in net profits in the first quarter this year, a 5 percent drop from the Rp 102.1 billion it booked in the same period last year. Its total lending reached Rp 27.8 trillion as of March, a slight increase from Rp 25.9 trillion as of December last year.

Vice president Vinsensius Chandra said that Mayapada'€™s total loans were already at Rp 30 trillion as of June, a 12 percent increase year-on-year (yoy).

In a bid to maintain its healthy financial performance, Bank Mayapada was currently more selective in disbursing its loans so as to avoid an increase in non-performing loans.

Haryono said that the government'€™s plan to increase spending for infrastructure development in the second quarter would be able to spur the economy, which fell to 4.7 percent in the first quarter, the lowest level since 2009.

The statistics, published by the Financial Services Authority, show that commercial banks'€™ profits fell 0.7 percent in the 12 months leading up to April, to Rp 36.85 trillion amid the country'€™s economic slowdown. This is the first yoy decline that the industry has posted this year after continuously recording slower lending growth rates since January.

Haryono hoped the expected acceleration of economic growth in the second half would be able to push demand for loans, which would in turn drive up earnings.

During the shareholders meeting, Bank Mayapada secured approval for the allocation of 2.98 percent of its 2015 profits of Rp 435 billion to provision for loan losses, and to retain the remainder to improve its capital position.

Haryono said that in addition to retaining the majority of the profits, the bank also plans to launch rights issues in the future with a view to upgrading the bank to BUKU (book) III category, which includes banks with capital of between Rp 5 trillion and Rp 30 trillion.

Indonesian banks are divided into four categories based on their core capital. BUKU I is for banks with core capital of between Rp 100 billion and Rp 1 trillion, BUKU II for those with core capital of between Rp 1 trillion to Rp 5 trillion, BUKU III for Rp 5 trillion to Rp 30 trillion and BUKU IV for those with core capital exceeding Rp 30 trillion. (agn)