Bank Permata 2005 earnings may fall, official says
Bank Permata 2005 earnings may fall, official says
Aloysius Unditu, Bloomberg, Jakarta
PT Bank Permata, an Indonesian lender partly owned by Standard Chartered Plc, may report a decline in full-year profit as it sets aside more to cover potential bad loans, said the bank's corporate secretary Imam Teguh Saptono.
"Our profit may fall to below Rp 472 billion (US$47.1 million) this year," said Saptono in a telephone interview. Last year's profit was also boosted by a one-time gain from funds that had been set aside when it merged with other lenders.
Indonesia's central bank, Bank Indonesia, tightened lending and bad-debt rules earlier this year to improve transparency and help sell bank stakes to recoup more than Rp 450 trillion spent on lenders after the 1997 Asian financial crisis.
Banks are now required to classify as a loss any loan on which no principal or interest has been paid for 180 days, reducing the period from 270 days. Loans to a borrower owing money to two or more banks will all be considered bad should just one go into default.
The loan loss provision increased to Rp 131.5 billion in the first nine months of this year from 60.9 billion a year ago, Saptono said. "This will curb our earnings," he said.
The lender posted a net profit of 622.7 billion and net interest income of Rp 1.31 trillion last year. It had an "extraordinary income of Rp 150 billion" because of funds that had been set aside following its formation, Saptono said.
Bank Permata was formed in September 2002 through the merger of PT Bank Bali, PT Bank Universal, PT Bank Arthamedia, PT Bank Prima Express and PT Bank Patriot.
The lender made Rp 6 trillion in new loans in the first nine months of this year, outpacing its full-year target of Rp 4 trillion, Saptono said.
"We have exceeded the full year target," Saptono said.
Permata is controlled by Standard Chartered, a U.K. lender that makes two-thirds of its profit in Asia, and PT Astra International, Indonesia's biggest auto distributor, which jointly paid Rp 3.4 trillion for 62.2 percent of the lender in December last year.
Rising interest rates may also hurt bank earnings. Bank Indonesia has raised its benchmark interest rate five times since July, with a record 1 1/4 percentage point increase on Nov. 1 to curb inflation and bolster the currency.