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

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)