Bank Danamon loans, profit up<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Publicly listed Bank Danamon announced on Wednesday an 8.5
\npercent increase in its unaudited nine-month net profit, thanks
\nto rapid expansion in lending, particularly consumer lending.<\/p>\n
The country's fifth-largest bank by assets booked an after-tax
\nprofit of Rp 1.89 trillion as of September 2005, as compared to
\nthe Rp 1.75 trillion it posted in the same period last year.<\/p>\n
The bank's outstanding loans grew by 38 percent, from Rp 25.98
\ntrillion a year ago to Rp 35.72 trillion this year, pushing its
\nnet interest income to rise by 18 percent to Rp 3.47 trillion.<\/p>\n
Danamon, which currently manages Rp 44.66 trillion in third-
\nparty funds, recorded a 9 percent rise in its net interest margin
\nin the first nine months, higher than the 8 percent increase in
\nthe corresponding period a year earlier.<\/p>\n
In total, consumer loans make up 42 percent of total loans, as
\ncompared to 41 percent last year, dominated by lendings for
\nvehicle purchases of 76 percent, thanks to the lender's vehicle
\nfinancing firm Adira Finance's sound performance, having booked a
\n37 percent rise in net income from Rp 257 billion to Rp 353
\nbillion.<\/p>\n
With the fairly solid nine-month showing, Vera Eva Lim,
\nDanamon's chief financial officer, said full-year loans were
\nexpected to grow by 22 percent to 25 percent from the 2004 full
\nyear figure of Rp 29.4 trillion.<\/p>\n
\"Higher interest rates will curb loan growth by consumer-
\nrelated companies next year,\" Vera said.<\/p>\n
The central bank has been aggressively raising its reference
\ninterest rate in past months to help contain inflation and keep
\nthe rupiah attractive. The central bank's benchmark interest rate
\ncurrently stands at 11 percent.<\/p>\n
Next year's outlook, however, was not that bright, according
\nto president director Sebastian Paredes.<\/p>\n
\"We project that lending will grow slower to about 20 percent
\nnext year as a result of the current economic situation and
\nhigher interest rates,\" said Sebastian.<\/p>\n
The bank also reported a decline in its nonperforming loans
\n(NPL) from Rp 1.5 trillion (5.8 percent of total loans) last year
\nto Rp 786 billion (2.2 percent) in 2005.<\/p>\n
\"We have been reasonably disciplined in extending our credit
\nand strong loan recoveries have resulted in a decline in our
\nNPL,\" added Sebastian.<\/p>\n
The capital adequacy ratio (CAR) weakened from 30.2 percent in
\nthe same period last year to 24.4 percent.<\/p>\n
Shares in the bank, controlled by Singapore's state-owned
\ninvestment company Temasek Holdings Pte. Ltd., rose 1.3 percent
\non Thursday to close at Rp 3,875.<\/p>",
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