BII net profit jumps 135%

BII net profit jumps 135%

The Jakarta Post, Jakarta

Publicly listed Bank Internasional Indonesia (BII) reported a
135 percent jump in its 2003 audited net profit on the back of
strong revenue from lending and low cost of funds.

The country's sixth largest lender said on Monday its net
profit surged to Rp 309 billion (about US$36.3 million) last year
from Rp 132.5 billion in 2002.

Net interest revenue, the interest earned from borrowers after
deducting the interest paid to depositors, was Rp 1.01 trillion,
compared to a loss of Rp 49.29 billion in 2002.

The increase in the bank's profit was primarily attributable
to the decline in the central bank's benchmark interest rate,
which allows banks to increase their loans to consumers at more
affordable rates.

The bank recorded an 8 percent increase in revenue from
lending to Rp 3.34 trillion from Rp 3.08 trillion, while its
interest burden, or cost of funds, declined to Rp 2.32 trillion
from Rp 3.13 trillion due to the lower interest environment.

Like other banks, BII is reaping a profit from the significant
gap between its lending rates and the interest it pays on
deposits.

The loan-to-deposit ratio (LDR) last year reached 35.03
percent, a sharp increase from 19.39 percent the previous year.

However, the bank's capital adequacy ratio (CAR) declined to
22.02 percent from 33.21 percent, due to an increase in loan
exposure.

The bank's consolidated lending volume last year reached Rp
10.22 trillion, up by 80 percent from Rp 5.66 trillion in 2002.

BII plans to provide some Rp 6 trillion in new lending in
2004, with about 60 percent of the loans to be channeled to the
consumer and commercial sectors.

Last year, BII allocated about half of its new loans for the
corporate sector, while the remainder went to the consumer and
commercial sectors.

Aside from rising demand, the bank's focus on the consumer and
commercial sectors is also attributable to the fact that these
sectors carry less risk than lending to the corporate sector.

Local banks, just beginning to recover from the devastating
late 1990s financial crisis, have largely avoided lending to the
corporate sector, which is seen as too risky due to the slow
progress of restructuring the bad debts owed by many companies.

Due to a reduction in its lending exposure to the corporate
sector, BII was able to improve its non-performing loans ratio
last year to 6.20 percent from 9.02 percent in 2002.

BII is now 51 percent controlled by a consortium led by South
Korea's Kookmin Bank and the Singapore government's investment
arm, Temasek Holdings Pte. Ltd.

BII, the former financial flagship of the now-indebted Sinar
Mas Group, currently boasts total assets of Rp 34.72 trillion and
about 1.1 million customers.

The bank's shares on the Jakarta Stock Exchange ended down by
Rp 5 to Rp 110 on Monday.