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BTN books lower profit in H1, but optimistic 2019 target can be achieved
BTN’s H1 profits fell due to high interest rates and an increase in allocation for loan reserves
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Laborers work on a housing development for middle-income consumers funded by Bank Tabungan Negara (BTN) in Serpong, South Tangerang. BTN reported Friday an 8 percent decline in net profit during the first half of 2019. (Antara/Audy Alwi )
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tate-owned lender Bank Tabungan Negara (BTN) recorded a net profit of Rp 1.3 trillion (US$93.03 million) in the first half, down around 8 percent from Rp 1.42 trillion in the same period last year.
BTN president director Maryono said on Friday that the decline in profits was partly due to the sharp increase in Bank Indonesia’s reference rate. "Despite the increase in BI’s rate up to five times last year, we did not raise our lending rates. So our profitability stagnated," he said.
Bank Indonesia raised its benchmark rate by an accumulative 175 basis points (bps) from 4.25 percent in April, 2018 to 6 percent in November, 2018. The central bank maintained this rate until it lowered it by 25 bps to 5.75 percent on July 18 amid a low inflation rate and an indication that the US central bank would begin cutting its benchmark rate sooner than initially estimated.
The decline in profits, Maryono said, was also caused by an increase in the company’s allocation for loan reserves in order to meet the new Financial Accounting Standard (PSAK) 71, which requires banks to provide larger reserves.
Nevertheless, Maryono expressed high hopes that the bank's net profit could reach its target of Rp 2.6 trillion by the end of the year.
The bank's third-party funds grew 15.89 percent yoy to Rp 234.89 trillion in the first half. Interest income also grew 19.81 percent to Rp 12.78 trillion, higher than the Rp 10.66 trillion it recorded in the first half of 2018.
Meanwhile, during the same period, loans grew 18.78 percent to Rp 251.04 trillion from Rp 211.35 trillion. BTN data show that housing loans increased 19.72 percent yoy to Rp 173.61 trillion. (hen)
