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Bank Jatim registers Q1 profit amid increasing bad loans
Bank Jatim has booked an increase in net income and total assets in the first quarter of 2016, amid the gross increase of non-performing loans (NPL) to 4.59 percent due to the current economic slowdown.
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A Bank Jatim teller serves a customer. The bank has booked a US$23.8 million net income in the first quarter of 2016. (Antara/Rosa Panggabean)
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ank Jatim has booked an increase in net income and total assets in the first quarter of 2016, amid a gross increase in non-performing loans (NPL) to 4.59 percent due to the current economic slowdown.
The lender booked a 21.5 percent increase in net income to Rp 312.8 billion (US$23.8 million) year-on-year (YoY), while the total assets rose 7.25 percent to Rp 49.1 trillion. Amid low interest rates, the bank's deposits dropped 9.77 percent.
"We are trying to reduce deposits because of its expensive cost. Only after that can we offer loans with better interest," said Bank Jatim director Su'udi on Monday in Jakarta, adding that the loan to deposit (LDR) ratio was still low at only 68.1 percent.
The company recorded a low loan disbursement as it also had to deal with a noteworthy amount of NPL in the first quarter. A task force had been created to solve the NPL problem in the lending front, Su’udi further said.
“There are loan problems that cannot be solved only through write-offs, as they also need personal approaches," he said, explaining that the lending peak usually occurs in the third quarter when projects get underway.
Trimegah Securities analyst Angga Aditya Assaf said the potential increase of Bank Jatim’s bad loans would affect the market's appetite for its stocks, which currently traded at around Rp 460 per share.
"Currently, the target price for Bank Jatim shares [for the future] is Rp 600. But we will probably change the recommendation due to potentially rising bad loans," he explained. (ags)
