Bank Danamon net profit jumps by 61%
The Jakarta Post, Jakarta
Bank Danamon, the country's fifth largest bank in terms of assets, announced on Wednesday that 2003 net profit jumped by 61 percent on strong revenue from lending and fee-based activities.
In a report to the Jakarta Stock Exchange, the publicly listed bank said that net profit increased to Rp 1.53 trillion (about US$182 million) last year from Rp 948 billion in 2002.
It said that net interest income jumped by 47 percent during the year, while acknowledging that the bank was now "less dependent on interest income from government bonds."
The bank said that shares of government bonds to interest income has declined to 31 percent from 51 percent.
Danamon, which is 61.88 percent owned by a consortium of Temasek Holdings and Deutsche Bank, said that loans grew steadily during the year and were more diversified among three major segments including the corporate sector, consumer, and small- and medium-sized enterprises.
The bank's loan-to-deposit ratio increased to 57 percent last year from 52 percent in the previous year.
Danamon also said that cost of funds decreased considerably, improving its net margin.
The bank did not explain the reason for the lower cost of funds, but several analysts have said that the current declining trend in Bank Indonesia's benchmark interest rate has pushed interest rates for savings and deposits.
The bank said operating income rose by 45 percent to Rp 3.53 trillion, while fee income increased by 40 percent to Rp 980 billion.
It said that the strong profitability has improved its financial ratios, pointing out that capital adequacy ratio (CAR) increased to 26.8 percent from 25.3 percent, while return on equity and return on assets, respectively increased to 31.4 percent and 3.3 percent.
But the bank acknowledged that its non-performing loan ratio increased to 6.8 percent from 4.4 percent, but was mainly attributed to the purchase of unrestructured non-performing loans from the Indonesian Bank Restructuring Agency (IBRA).