BCA set to beat 2004 profit forecast

BCA set to beat 2004 profit forecast

Bloomberg, Jakarta

Bank Central Asia, Indonesia's second-biggest lender, expects to beat its 2004 profit forecast as faster economic growth encourages consumers and companies to borrow more, president commissioner Eugene Galbraith said.

The Jakarta-based lender had forecast net income to increase 42 percent to Rp 3.4 trillion (US$376.7 million) this year from Rp 2.39 trillion in 2003.

"The initial guidance we had at the beginning of the year is clearly going to be exceeded," Galbraith said in an interview. "Our consumer lending is expanding very nicely. Our loans to small businesses and to larger enterprises are also showing nice percentage increases."

Bank Central Asia and other Indonesian banks are benefiting as interest rates at six-year lows propel faster loan growth in Southeast Asia's largest economy, and help lenders pare funding costs. The economy is forecast by the government to expand 4.8 percent this year and 5.4 percent in 2005.

Increased consumer spending, which already makes up 70 percent of the $208 billion economy, is spurring the construction of more homes and shopping malls in a nation that votes today in its first direct presidential election.

Bank Central Asia's first-half net income rose 48 percent to Rp 1.51 trillion. Consumer loans more than doubled to Rp 4.4 trillion at the end of June.

Bank Central Asia, a unit of U.S. hedge fund Farallon Capital Management LLC, has targeted extending as much as Rp 10 trillion in new loans this year, from Rp 9 trillion last year. It expects to make Rp 4 trillion of new loans in the second half of 2004.

"For this year there is some possibility of exceeding the target," Bank Central's Galbraith said. Still, "continued growth from where we are now will be much more difficult because of the difficulty of finding both good projects and qualified, secure borrowers."

Bank Central Asia, which runs 761 domestic branches, had Rp 141.74 trillion of assets at the end of June.