Bank Niaga net profit jumps 230%<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Publicly listed Bank Niaga has reported a more than 230 percent
\njump in 2003 net profit on the back of strong revenue from its
\nlending operation.<\/p>\n
The country's ninth largest lender said on Thursday its net
\nprofit surged to Rp 467.25 billion (US$55.29 million) last year
\nfrom Rp 141.12 billion in 2002.<\/p>\n
Net interest revenue, interest earned from borrowers after
\ndeducting interest paid to depositors, almost doubled to Rp
\n937.85 billion from Rp 478.87 billion.<\/p>\n
Bank Niaga president Peter B. Stok predicted profits would
\ngrow by another 30 percent this year.<\/p>\n
Many banks in the country have benefited from the aggressive
\ndecline in the central bank's benchmark interest rate, which
\nallows banks to increase their loans to consumers at more
\naffordable rates.<\/p>\n
The economy, which grew by around 4.1 percent last year, has
\nbeen primarily driven by domestic consumption, which in turn was
\nfueled by the cheaper loans. The loans have pushed up demand for
\nconsumer goods and high-value assets like cars and real estate.<\/p>\n
Like other banks, Bank Niaga is reaping a profit from the
\nsignificant gap between its lending rates and the interest it
\npays on deposits. Currently, Bank Niaga's borrowing rates stand
\nat between 13 percent and 14 percent per annum while its deposit
\nrates stand at about 6 percent.<\/p>\n
To reach its 2004 profit target, the bank would increase its
\nnew loans by around 30 percent from last year's outstanding loans
\nof Rp 14.41 trillion, Peter said.<\/p>\n
About two thirds of new lending will be aimed at the consumer
\nsector and small and medium-sized businesses.<\/p>\n
Third-party funds gathered by the bank last year amounted to
\nRp 19.33 trillion.<\/p>\n
The loan-to-deposit ratio (LDR) in the same period reached
\n72.12 percent, a sharp increase from 59.57 percent in the
\nprevious year.<\/p>\n
Peter said the bank was considering a rights issue that would
\nraise funds to increase its capital adequacy ratio (CAR). Last
\nyear, the bank's CAR declined to 11.58 percent, from 12.72
\npercent in 2002, due to an increase in loan exposure.<\/p>\n
The plan had yet to be approved by the shareholders, who would
\nconvene in April.<\/p>\n
Bank Niaga, has a network of 16 branches and 3,559 employees.
\nIts largest shareholder is Malaysia's Commerce Asset-Holding
\nBhd., which holds a 52.8 percent controlling stake.<\/p>",
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