Bank Bali expects 22% increase in net profits

Bank Bali expects 22% increase in net profits

JAKARTA (JP): The publicly-listed Bank Bali has predicted a conservative 22 percent increase in net profits, from last year's unaudited figure of Rp 91 billion (US$39.3 million), for this calendar year.

The projected profit growth for this year is much lower than the 30 percent rise in net profit for last year, bank executive Firman Soetjahja, said.

"We prefer a conservative prediction because it will be very difficult to generate a large income this year after the government introduced tighter monetary policies for the industry last year," he added.

Firman cited an example that a one-percentage-point increase in reserve requirement set by the central bank, Bank Indonesia, would mean a 0.50 percent increase in costs for Bank Bali.

Bank Indonesia has required all commercial banks to increase their minimum reserves from 2 percent of their funds to 3 percent, beginning this month.

"And the higher costs will reduce our incomes by up to Rp 14 billion this year," Firman said.

He also said that Bank Bali will reduce its lending to the property sector, which last year accounted for 23 percent of its total credits.

Based on an unaudited report, the bank's total assets rose by 38 percent to Rp 6.5 trillion as of the end of last year; its total credits were Rp 4.5 trillion.

Firman said that about 23 percent of the bank's total credits were allocated to the property sector, 27 percent to the trading sector, 28 percent to the manufacturing sector and the remaining 22 percent to other sectors.

He added that Bank Bali's credits to its own group's businesses was less than one percent of its total credits outstanding last year.

Most of Bank Bali's group companies operate in financial services such as insurance, leasing, securities and multi- finance.

Firman also said that Bank Bali will open two branch offices in the towns of Pekanbaru, Riau, and Yogyakarta this year, increasing the total number of branches to 131. (08)