Profits down for BCA, Lippo, up for BII, Panin<\/p>\n
Rendi A. Witular
\nThe Jakarta Post
\nJakarta<\/p>\n
During the first semester of this year large-sized Bank
\nCentral Asia (BCA) and Bank Lippo lost ground over their net
\nprofits while their rivals Bank Internasional Indonesia (BII) and
\nBank Panin advanced forward with impressive growth.<\/p>\n
Banking analyst M. Fendi Susiyanto from BNI Securities told
\nThe Jakarta Post on Wednesday that the decline in the first two
\nbanks' profits was mostly attributed to the lower interest income
\nearned from the government's recapitalization bonds.<\/p>\n
"The income from recap bonds was declining because the
\nbenchmark interest rates fell drastically during the second
\nquarter," said Fendi.<\/p>\n
The central bank has been cutting the one-month SBI rate lower
\nby around 30 percent since early this year to the current level
\nof 9.23 percent.<\/p>\n
Fendi explained that the decline had heavily impacted on BCA
\nand Lippo because their recap bonds mostly consisted of variable
\nnet bonds carrying floating indicative rates.<\/p>\n
Floating rates were considered too risky for a bank that
\nheavily depended on revenue from the yield of recap bonds because
\nwhen the rates declined, then their income from interests would
\nalso decline, Fendi said.<\/p>\n
Fendi gave out an example that 95 percent of BCA's total recap
\nbonds currently worth Rp 40.3 trillion carried a floating rate,
\nwhich made it very sensitive to any fluctuation in the benchmark
\nrates.<\/p>\n
Government bonds make up around 35 percent of BCA's assets and
\nabout 25 percent of Lippo's.<\/p>\n
"BCA and Lippo must have anticipated the fluctuations, but I
\ndo not know why they are still relying on the bonds," said Fendi.<\/p>\n
He forecasted that the profits of the two banks could plunge
\nfurther at the end of the year if they failed to significantly
\nunload their recap bonds, cut the cost of fund and increase the
\nchanneling of lending.<\/p>\n
BCA's net profit for the first half plunged by 33 percent to
\nRp 1.02 trillion (US$120 million) from Rp 1.52 trillion in the
\nsame period last year while Lippo's fell to Rp 26.4 billion from
\nRp 78.1 billion.<\/p>\n
The capital adequacy ratio (CAR) of BCA, the country's third
\nlargest bank in terms of assets, also declined to 38.25 percent
\nfrom 41.55 percent and Lippo's to 23.21 percent from 26.48
\npercent.<\/p>\n
The drop in Lippo's profit is worrisome because the
\ngovernment, which controls 55 percent of the bank, plans to sell
\na 51 percent stake in it in the fourth quarter.<\/p>\n
Fendi suspected that the bank's bad performance could lower
\nthe price of the bank's shares, which in turn would open the way
\nfor the former owner of Lippo, the Riyadi family, to repurchase
\nthe bank cheaply.<\/p>\n
Under the current price, the government's 55 percent stake in
\nthe bank would only be worth around Rp 600 billion, way below the
\nRp 7.2 trillion in state funds the government had injected for
\nits recapitalization in 1999.<\/p>\n
Meanwhile, the competitors of the two banks, BII and Panin,
\nmanaged to record better performances last semester.<\/p>\n
BII, which is also a recap bank with government bonds
\ncurrently worth Rp 16.6 trillion, booked a net profit of Rp 143
\nbillion as compared to the losses of Rp 251 billion.<\/p>\n
The surge was mainly driven by an increase in interest income
\nto Rp 311 billion from Rp 245 billion. The bank's CAR has soared
\nto 25.88 percent from -58.09 percent.<\/p>\n
Meanwhile, Panin, a bank which managed to survive the
\nfinancial crisis without receiving any bailout from the
\ngovernment, recorded a jump in the net profit mostly from
\ninterest and fee-based incomes.<\/p>\n
The company's profit rose by more than 1,000 percent to Rp 196
\nbillion in the first semester from just Rp 16.8 billion in the
\nsame period last year. The bank's CAR has also increased to 34.6
\npercent from 32.9 percent.<\/p>\n
Bank Danamon announced late on Wednesday that net profit for
\nthe first half increased by 49.6 percent to Rp 615 billion from
\nRp 411 billion in the same period last year on the back of higher
\ninterest revenue and healthy fee-based income.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/profits-down-for-bca-lippo-up-for-bii-panin-1447899208",
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