Banks' combined profits surge by 35% to $1.95b

JAKARTA (JP): The combined net profits of the country's 240 commercial banks rose by 35 percent to Rp 4.63 trillion (US$1.95 billion) last year from Rp 3.42 trillion in 1994, according to Bank Indonesia Governor J. Soedradjad Djiwandono.

Soedradjad said in a hearing with House Commission VII for finance and trade yesterday that the sharp increase in the profits resulted mainly from a significant growth in their interest revenues.

The governor projected that the banks' profits would continue to grow this year owing to further increases in their lending activities.

According to the central bank's latest data, the banks' total loans, including those in foreign currencies, rose by 25 percent to Rp 264.5 trillion as of July from Rp 211.76 trillion as of the same month in 1995.

Speaking at the hearing, Soedradjad said that the income tax on interest paid by depositors rose by 28 percent to Rp 190.8 trillion in 1995 from Rp 148.6 trillion in 1994.

"The income tax on interest paid by depositors has already reached Rp 211.7 trillion in the first six months of this year," he said.

The interest of time deposits and other savings are subject to a 15 percent final income tax. The tax is collected by the commercial banks under the supervision of the central bank.

Soedradjad projected that the income tax to be paid by depositors from their interest revenues would continue to increase in the future in line with the upward trend in the growth of time deposits and other savings in the country's commercial banks.

The banks' funds (deposits and savings) increased by 29 percent to Rp 247.34 trillion as of June this year from Rp 190.39 trillion as of the same month of last year, according to the central bank's data.

Soedradjad said the performance of the banking industry was very encouraging during the last two years.

He said that the average rate of Return on Assets (ROA) and Return on Equity (ROE) of the 240 commercial banks rose to 17.5 percent and 6.14 percent respectively last year from 1.21 percent and 2.95 percent in 1994.

"The average ROA and ROE further improved by 1.2 percent and 6.42 percent respectively during the first six months of this year," he said.

Soedradjad said that the improvement of the banks' performances resulted partly from the enforcement of the central bank's regulations.

The 240 commercial banks at present have around 6,750 branches.

According to Bank Indonesia's 1995/96 annual report, the total assets of the banks grew by 30.4 percent to Rp 328.6 trillion as of the end of the 1995/96 fiscal year ended in March. The growth was far higher than the 15.6 percent made in the previous fiscal year. The portion of the banks' foreign assets also swelled from 11.1 percent to 15.4 percent or Rp 27 trillion as of March.

In addition, the banks' total equity increased by 39 percent to Rp 32 trillion as of the end of the last fiscal year on the impact of the central bank's requirement on the increase of the capital adequacy ratio (CAR) to at least 8 percent of the productive assets. (hen)