BCA profit rises 32% on lending exoansion, spurred by GDP growth

BCA profit rises 32% on lending exoansion, spurred by GDP growth

PT Bank Central Asia, Indonesia's second-largest lender by assets, posted a 32 percent increase in 2004 profit as an expanding economy spurred companies and individuals to borrow more.

Unaudited net income last year was Rp 3.15 trillion (US$339 million), Finance Director Jahja Setiaatmadja said in Jakarta. The lender earned Rp 2.39 trillion in 2003 profit, according to previously announced figures.

"The figure was encouraging, and the lender has good profit potential as it has low cost of funds," said Fendi Susiyanto, who helps manage the equivalent of $1.62 billion at BNI Wealth Management, including shares of PT Bank Niaga and PT Bank Rakyat Indonesia.

"We are waiting for the right time to add this stock to the portfolio."

Bank Central Asia, a unit of U.S. hedge fund Farallon Capital Management LLC, and other Indonesian lenders are expanding loans to consumers, spending by whom accounts for 70 percent of the $208 billion economy.

Demand for credit is expanding in an economy the government forecasts will grow as much as 5.5 percent this year, up from 5.1 percent last year.

"Our loans rose, boosting interest income and raising profit," said Setiaatmadja.

The lender added Rp 11 trillion in loans in 2004, beating its Rp 8 trillion target, he said.

The 2004 profit was in line with Bank Central Asia's forecast for Rp 3.1 trillion of net income. Profit may rise by 10 to 20 percent this year, Setiaatmadja said.

"We will extend Rp 8 to Rp 10 trillion in new loans, excluding loans to infrastructure projects," Setiaatmadja said.

Indonesia is trying to encourage investment in public works such as power plants, toll roads and airports this year to help boost the economy, create jobs and rebuild infrastructure damaged by the Dec. 26 tsunami.

Bank Central Asia's shares rose Rp 75, or 2.4 percent, to Rp 3,150 at the closing of trading on the Jakarta Stock Exchange. -- Bloomberg