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BNI profit growth declines amid sluggish loan disbursement
The lender’s net profit rose by only 2.5-percent year-on-year (yoy) to Rp 15.38 trillion (US$1.12billion) in 2019 from Rp 15.01 trillion in 2018.
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A person withdraws cash at an ATM in a shopping mall in Jakarta. Bank Negara Indonesia (BNI) booked a decline in net profits in 2019 due to an increase in the provision of loan losses. (Shutterstock/File)
State-owned lender Bank Negara Indonesia (BNI) recorded a less-than-stellar performance in 2019 as profit and loan growth slowed.
The lender’s net profit rose by only 2.5 percent year-on-year (yoy) to Rp 15.38 trillion (US$1.12billion) in 2019 from Rp 15.01 trillion in 2018, as a result of falling lending growth and a rise in loan loss provisions. Lending growth was well below the 10.3 percent rate recorded in 2018
BNI finance director Ario Bimo told the press on Wednesday that the slowdown in profit was caused by an increase in loan loss provisions the lender had to set aside in order to comply with new accounting standards.
“We estimate that we have to add another Rp 13 trillion to Rp 15 trillion for loan loss provisions to comply with the new standards,” he said.
Accounting standard (PSAK) 71, which started to take effect this year, requiring banks to set aside loan loss provisions from the beginning of a loan period. This means that banks must set aside provisions for both good and bad loans.
Other than bigger provisions, BNI’s slowing profit growth was also caused by a decline in lending growth throughout 2019.
The publicly listed lender’s loan disbursement grew by only 8.6 percent yoy to Rp 556.77 trillion in 2019, mostly driven by a 9.8 percent increase in corporate loans.
The lender also booked higher non-performing loans (NPL) of 2.3 percent last year, up by 400 basis points from 1.9 percent in 2018. However, Ario declined to go into detail about the bad loans.
Nevertheless, BNI still seemed satisfied with its loan disbursement performance as the figure was still higher than the banking industry average, which reached 6.5 percent as of October 2019, said Ario.
The bank also booked a 3.3 percent yoy growth in net interest income (NII) to Rp 36.6 trillion last year amid a slowdown in loan disbursement, he said.
As for this year, the lender remains upbeat about an increase in profit and loan growth.
“We hope our loan growth could reach 10 percent to 12 percent this year, while our profit could grow by double digits in 2020,” he said.
