Fri, 02 May 2003

BNI, BRI report higher first quarter profits

Rendi A. Witular, The Jakarta Post, Jakarta

State-owned Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BNI) announced on Thursday increased earnings in the first quarter of this year on higher income from lending activities.

President of the publicly-listed BNI, Saefuddin Hasan, said net profit in the first quarter rose by 2.1 percent to Rp 865 billion (about US$100 million), compared to the same period last year.

Interest revenue from lending business increased to Rp 1.06 trillion from Rp 966 billion.

"The rise (in net profit) is relatively moderate in comparison to last year, but looking at the source of the profit there are indications that BNI is gradually weaning itself away from relying on recap bonds as its main source of revenue," said Saefuddin.

Most of the country's major banks were injected with massive amounts of government bonds to help them stay afloat during the late 1990s financial crisis. The banks receive interest on the bonds, and for the past couple of years it is this interest that has been their main source of profits as they have virtually stopped providing loans to avoid risk.

BNI received Rp 61 trillion in recapitalization bonds, and last year it unloaded Rp 3 trillion worth of these bonds.

Total loans channeled by BNI in the first quarter increased by 13.2 percent to Rp 38.4 trillion

The bank's capital adequacy ratio (CAR), which measures the financial health of a bank, increased to 18.02 percent during the quarter.

BNI also reported that its non-performing loans for the first quarter dropped sharply from 26.81 percent in 2002 to 5.29 percent on a successful debt restructuring process and debt write-offs.

BNI projects its net profit this year will reach Rp 2.8 trillion compared to Rp 2.5 trillion last year.

Meanwhile, BRI said that first quarter gross profit increased to Rp 731 billion from Rp 535 billion in the same period last year, also on higher interest revenue from loans.

BRI president Rudjito said that the bank would continue to boost profits from its lending business, adding that it would unload around Rp 2 trillion worth of bonds next year.

The bank plans to launch an initial public offering this year.