BNI profit jumps to 1.54t<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
After being hit by a high-profile loan scandal that trimmed
\nits net profit last year, state-owned Bank Negara Indonesia (BNI)
\nrecorded a threefold increase in first half net profit as against
\nthe same period last year.<\/p>\n
The unexpected rise in profit may help the government's plan
\nto sell a 30 percent stake in the country's third largest bank in
\nterms of assets at the end of this year, in a bid to raise funds
\nto cover a budget deficit estimated at Rp 24 trillion rupiah.<\/p>\n
The government has a 99.12 percent stake in BNI, with the
\nremaining shares held by the public.<\/p>\n
In a statement on Friday, the publicly listed bank said profit
\nin the first six months ending June jumped to Rp 1.54 trillion
\n(US$171 million) from Rp 408 billion in the corresponding period
\nlast year.<\/p>\n
BNI president director Sigit Pramono attributed the surge
\nprimarily to lower cost of funds after the central bank benchmark
\ninterest rates fell to a six-year low, reducing the burden the
\nbank had to pay for its depositors.<\/p>\n
\"The bank is reaping a profit from the significant gap between
\nits lending rates and the interest it pays on deposits,\" said
\nSigit in a telephone interview.<\/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 reduce their interest for deposits and at the
\nsame time increase their loans to consumers at more affordable
\nrates.<\/p>\n
The bank's cost of funds declined to Rp 2.54 trillion in the
\nfirst half of this year from Rp 4.55 trillion a year earlier,
\ncausing net interest to increase to Rp 3.33 trillion from Rp 2.21
\ntrillion. Net interest income is revenue from borrowers
\nminus interest paid to depositors.<\/p>\n
The bank's income from interest fell to Rp 5.88 trillion in
\nthe first half from Rp 6.75 trillion a year earlier due to the
\nlow demand for loans from the real sector following political
\nuncertainty during the general election.<\/p>\n
In the first six months of this year, BNI only managed to
\nchannel Rp 8.3 trillion in loans, or 52 percent of its total
\nlending target for this year of Rp 16 trillion.<\/p>\n
\"The low loan expansion is not because we are reluctant or not
\nworking hard enough. It is because there is no demand for it,\"
\nsaid Sigit.<\/p>\n
BNI's outstanding loans rose to Rp 50.3 trillion as of June,
\nfrom Rp 42 trillion in the same period last year.<\/p>\n
The bank revised downwards its first-half profit last year
\nafter setting aside a provision to cover potential losses from a
\nloan scandal in mid-2003. The bank had set aside Rp 1.3 trillion
\nfor the provision.<\/p>\n
The BNI loan scandal centered on the channeling of export
\ncredits without proper appraisals by the bank's branch to a
\nnumber of local companies to finance the export of commodities.<\/p>\n
It later turned out that the exports never materialized,
\ncausing BNI to lose Rp 1.7 trillion.<\/p>\n
BNI shares were unchanged at Rp 1,075 on the Jakarta Stock
\nExchange on Friday.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bni-profit-jumps-to-154t-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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