BCA reports Rp 62b decline in profit
The Jakarta Post, Jakarta
Bank Central Asia (BCA) said on Monday it had posted a decline in its nine-month pre-tax profit to Rp 2.18 trillion (about US$258 million) from Rp 2.80 trillion posted in the same period a year earlier.
The bank, the country's largest private lender, said in a statement the profit figures were not a cause for pessimism and that business prospects look good due to a combination of an improvement in the country's monetary indicators and the bank's solid performance.
It was attributable to its ability to maintain its net interest margin ratio, which stood at 4.92 percent, the statement added.
Net interest margin (NEM) measures the ratio between interest revenue obtained from borrowers and the interest payment allocated to its depositors.
The release said the declining trend in the bank's income from the government's recapitalization bonds has forced it to gradually reduce the composition of the bonds as part of the bank's overall portfolio.
As of September, the publicly listed bank managed to reduce its recap bonds to Rp 37.3 trillion, or some Rp 14.5 trillion lower than it had recorded last year during the same period, which stood at Rp 51.83 trillion.
With a significant reduction in its recap bonds composition, the bank managed to avoid the losses that many other recapitalized banks are currently suffering due to the declining trend in the central bank benchmark interest rate.
Thanks to a more stable rupiah and manageable inflation, the central bank's interest rate is now hovering at around 8.64 percent, far below the 13 percent or so at the end of last year.
According to Bloomberg data, the average on the central bank's one-month interest rate were 10.7 percent in the nine months to September, as compared to 15.8 percent booked in the same period last year.
As of September, BCA recorded outstanding loans with a value of Rp 24.5 trillion, around Rp 6.5 trillion higher than the bank booked last year during the same period.
The country's largest private bank is 52 percent owned by the U.S. investment fund firm Farallon Capital Management. The government holds 8.5 percent with the public owning the remainder.