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BNI profit plunges, Mandiri maintains earning growth
Good record: Bank Mandiri president director Budi Gunadi Sadikin (left) and director for treasury and markets Pahala N
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Good record: Bank Mandiri president director Budi Gunadi Sadikin (left) and director for treasury and markets Pahala N. Mansury present the lenderâs first half financial reports in Jakarta on Thursday. Mandiri posted a 3.5 percent increase in net profit to Rp 9.9 trillion.(JP/Ricky Yudhistira) (left) and director for treasury and markets Pahala N. Mansury present the lenderâs first half financial reports in Jakarta on Thursday. Mandiri posted a 3.5 percent increase in net profit to Rp 9.9 trillion.(JP/Ricky Yudhistira)
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span class="inline inline-center">Good record: Bank Mandiri president director Budi Gunadi Sadikin (left) and director for treasury and markets Pahala N. Mansury present the lender's first half financial reports in Jakarta on Thursday. Mandiri posted a 3.5 percent increase in net profit to Rp 9.9 trillion.(JP/Ricky Yudhistira)
Indonesia's two state banks Bank Negara Indonesia (BNI) and Bank Mandiri reported lower growth in their net profits in the first semester of this year as the country's economic slowdown hits their corporate borrowers.
BNI recorded Rp 2.43 trillion (US$180.59 million) in net profit from January to June, a 50.8 percent drop from the Rp 4.94 trillion it netted in the same period last year. Unlike BNI, Mandiri still recorded an increase in its net profit, but the rise was lower than that recorded last year.
'The drop in net profit is due to the allocation for loan losses. [...] We see that the slowing economy and depreciation of the rupiah have burdened our debtors,' said BNI president director Achmad Baiquni in a press briefing on Thursday. He added that the bank has raised the provisions for loan losses as part of its prudent approach to anticipate a possible increase in non-performing loans (NPL).
The provision for loan loss coverage ratio against non-performing loans rose to 138.8 percent over the first six months this year from 128.9 percent last year. BNI aims to increase it by 139 percent by the end of the year.
As BNI's lending portfolio rose 12.1 percent from the same period last year with outstanding loans of Rp 288.7 trillion as of the end of June, while gross NPL has also risen to 3 percent from 2.2 percent in the same period last year.
Achmad said that some of the bank's corporate borrowers, both big companies and small and medium-scale enterprises, had faced difficulties to pay their loans as their businesses were also affected by the country's economic slowdown.
Achmad said that the rise in the provisions for loan losses were partly caused by delay in loan payments from oil-related service companies, whose businesses had been hit hard by the fall in oil prices.
'The impact is massive. Many oil companies have renegotiated their contracts with their partners. This affects our debtors, so we need to restructure the debts,' he said.
Meanwhile, lending in the medium segment, which Achmad said was dominated by the manufacturing sector, posted the steepest NPL increase to 5.4 percent this year, from 2.7 percent last year.
Meanwhile, the country's largest lender by asset, Bank Mandiri, saw its net profits grow at a slower pace than last year despite being able to maintain double-digit growth in its lending and third-party funds, as it decided to take cautious measures amid the economic slowdown.
Mandiri reported that its net profits grew by 3.5 percent to Rp 9.9 trillion ($734 million) year-on-year in the first semester that ended in June this year, amid an increase in the bank's provision for loan losses. The profit growth was far lower than the 15.6 percent it recorded in the same period last year.
Its lending was up by 13.8 percent to Rp 552.8 trillion during the Jan-June period, while third party funds grew year with 17.81 percent to Rp 654.9 trillion. The lending and third-party funds growth rose from 17.8 percent and 10.7 percent, respectively, in the first semester last year.
The publicly-listed lender managed to see its net interest income up by 13.8 percent to Rp 21.2 trillion.
Mandiri fared better in booking lending growth than fellow major lender Bank Central Asia (BCA), which reported its first half report on Wednesday, and state-run BNI
Mandiri president director Budi Gunadi Sadiki said rising provisions for loan losses had contributed to lower bottom line growth.
'We allocated our income in the provisions as it is our policy to anticipate crisis amid economic slowdown. We have decided to retain the growth at 3.5 percent because we are more concerned about controlling our NPL [non-performing loans],' Budi said at the conference.
In the first half, the bank reported a slight increase in both its gross and net NPL ratios. While the gross NPL rose to 2 percent from 1.77 percent, the net NPL increased to 0.63 percent from 0.47 percent, according to the lender's documentation. (fsu)
