BNI Q3 profit almost doubles on consumer loans
BNI Q3 profit almost doubles on consumer loans
PT Bank Negara Indonesia (BNI), the nation's third-biggest lender, almost doubled its profit in the third-quarter as a drop in interest rates reduced funding costs and spurred consumers to borrow more to buy homes and cars.
Net income rose to Rp 1.26 trillion (US$138 million) in the three months ended Sept. 30, from Rp 645 billion a year earlier. The profit was derived by subtracting first-half earnings from nine-month results published by the bank on Wednesday.
Jakarta-based BNI and other Indonesian lenders are expanding loans to consumers, whose spending makes up 70 percent of the $208 billion economy, after interest rates in May fell to their lowest level in six years. Rates are set to rise as inflation accelerates, curbing demand for loans.
"Indonesian banks are performing well, mainly because of the strong growth in loans to consumers and small businesses," said Kelvin Miranda, who helps manage the equivalent of $180 million at Asian Asset Management Sdn. in Malaysia. "Loan growth may slow because interest rates may start rising."
The central bank said on Sept. 24 it may raise rates this year to slow inflation and stabilize the rupiah. Inflation is forecast by the bank to average 7 percent for 2004.
Miranda, who said he has sold his stakes in Indonesian banks, is considering investing again once it becomes clear what policies will be followed by the week-old government of President Susilo Bambang Yudhoyono.
Net interest income at BNI, or revenue from borrowers after deducting interest paid to depositors, rose 27 percent to Rp 1.73 trillion in the quarter, helped by a 39 percent drop in interest costs.
BNI's earnings last year were crimped by losses stemming from a fraud case that involved Rp 1.7 trillion of loans to fund commodity shipments to Africa. The lender's 2003 profit fell 67 percent to Rp 829 billion after it set aside money to cover those losses. BNI and police last year disclosed an investigation into the case.
For the nine months to Sept. 30, BNI's net income rose to Rp 2.32 trillion, or Rp 175 rupiah, from Rp 1.05 trillion, or Rp 47 rupiah, a year earlier. -- Bloomberg