S

tate-owned lender Bank Rakyat Indonesia (BRI) expects higher profits in 2016 than in the past two years as it banks on a speedy economic recovery in the country.

BRI president director Asmawi Syam said the bank was convinced it could achieve its net profit target this year.

'€œI think our net profit this year will be above the 2014 realization, which means it will be more than Rp 24 trillion,'€ he said after a meeting at the State-Owned Enterprises (SOEs) Ministry on Wednesday.

Asmawi attributed his upbeat assessment to what he sees as a better overall situation in Southeast Asia'€™s largest economy.

Despite the weak economy last year, BRI, the country'€™s most profitable bank, posted Rp 24.2 trillion (US$1.73 billion) in net profit in 2014, an increase of 14.3 percent from 2013.

Its performance in 2014 also made BRI the company with the highest profit among the country'€™s state-owned firms.

Entering 2015, continued economic weakness affected the bank'€™s net profit, which grew by only 1.41 percent year-on-year (yoy) to Rp 18.29 trillion in the first three quarters of the year, from Rp 18.03 trillion in the same period of 2014.

The impacts of global uncertainty and a weak domestic economy affected loan growth and the quality of credit last year.

BRI vice president director Sunarso said previously the bank'€™s net profit would probably grow by at least 5 percent this year based on its loan-growth target of about 13 percent.

However, Sunarso added that net profit growth would not exceed that of previous years, when the bank was able to book double-digit increases thanks to the country'€™s booming economy.

Meanwhile, the bank'€™s loan target is slightly more optimistic than in 2015, when growth of 11 to 13 percent was targeted.

BRI was still able to post loan growth above the industry'€™s average as its loan business grew by 11.8 percent year-on-year (yoy) to Rp 518.9 trillion in the first nine months of last year.

The bank'€™s main engine of loan growth was the micro business segment, which contributed 32.8 percent to the bank'€™s total loans and grew by 14.7 percent yoy to Rp 170.2 trillion as of the third quarter.

Despite expecting a faster increase in net profits this year, Asmawi said the bank'€™s net interest margin (NIM) would probably increase only slightly from last year as the lender targeted an NIM of 8.09 percent, compared to 8.08 percent in September last year.

The bank'€™s NIM as of the third quarter last year was down from 8.78 percent a year earlier.

'€œBesides the trend of declining lending rates, we will put greater focus on enlarging our volume [of interest income], rather than increasing our profit margin,'€ he said, adding that the more important thing was to ensure that profits grew this year.

SOEs Minister Rini Soemarno said on Tuesday that the ministry was expecting the country'€™s 118 state-run firms to increase their combined net profits to Rp 172 trillion this year, up 15 percent from Rp 150 trillion recorded last year.