Bank Niaga net profit jumps 230%
Bank Niaga net profit jumps 230%
The Jakarta Post, Jakarta
Publicly listed Bank Niaga has reported a more than 230 percent
jump in 2003 net profit on the back of strong revenue from its
lending operation.
The country's ninth largest lender said on Thursday its net
profit surged to Rp 467.25 billion (US$55.29 million) last year
from Rp 141.12 billion in 2002.
Net interest revenue, interest earned from borrowers after
deducting interest paid to depositors, almost doubled to Rp
937.85 billion from Rp 478.87 billion.
Bank Niaga president Peter B. Stok predicted profits would
grow by another 30 percent this year.
Many banks in the country have benefited from the aggressive
decline in the central bank's benchmark interest rate, which
allows banks to increase their loans to consumers at more
affordable rates.
The economy, which grew by around 4.1 percent last year, has
been primarily driven by domestic consumption, which in turn was
fueled by the cheaper loans. The loans have pushed up demand for
consumer goods and high-value assets like cars and real estate.
Like other banks, Bank Niaga is reaping a profit from the
significant gap between its lending rates and the interest it
pays on deposits. Currently, Bank Niaga's borrowing rates stand
at between 13 percent and 14 percent per annum while its deposit
rates stand at about 6 percent.
To reach its 2004 profit target, the bank would increase its
new loans by around 30 percent from last year's outstanding loans
of Rp 14.41 trillion, Peter said.
About two thirds of new lending will be aimed at the consumer
sector and small and medium-sized businesses.
Third-party funds gathered by the bank last year amounted to
Rp 19.33 trillion.
The loan-to-deposit ratio (LDR) in the same period reached
72.12 percent, a sharp increase from 59.57 percent in the
previous year.
Peter said the bank was considering a rights issue that would
raise funds to increase its capital adequacy ratio (CAR). Last
year, the bank's CAR declined to 11.58 percent, from 12.72
percent in 2002, due to an increase in loan exposure.
The plan had yet to be approved by the shareholders, who would
convene in April.
Bank Niaga, has a network of 16 branches and 3,559 employees.
Its largest shareholder is Malaysia's Commerce Asset-Holding
Bhd., which holds a 52.8 percent controlling stake.