BNI's net profit slumps by 5.9%

JAKARTA (JP): State Bank Negara Indonesia (BNI) announced a fall in net profits to Rp 315.23 billion (US$39.39 million) yesterday, a 5.9 percent decline on profits of Rp 335.13 billion made the previous year.

The bank said in a statement that the decline was attributable to the sharp depreciation in the value of the rupiah against the U.S. dollar.

"Our 1997 performance was significantly affected by the depreciation in the rupiah. Our asset base and foreign exchange income increased substantially, and our provisioning level was increased in anticipation of a higher number of non-performing loans," the statement said.

BNI, which is publicly listed, said yesterday that it had increased its loan-loss provision by 336 percent to Rp 689.7 billion in 1997, up from Rp 157.8 billion in 1996, in anticipation of a prolonged financial crisis.

"In anticipation of the decline in our asset quality due to a prolonged financial crisis, BNI increased its provisioning level," the statement said.

The bank said that nonperforming loans as a total of all loans rose to 6.8 percent in 1997 from the 1996 figure of 6.1 percent.

"The increase was primarily due to the monetary crisis," the statement said.

The monetary crisis has cut 70 percent from the value of the rupiah against the American dollar. The rupiah is currently trading at around Rp 8,000 to the dollar, compared to a pre- crisis level of Rp 2,450 in July last year.

The bank, however, said that total interest income rose 46 percent to Rp 1.43 trillion in 1997, up from Rp 966.43 billion in 1996, as a result of an expansion of credit in response to the decline in the value of the rupiah.

The bank's operating income before provisioning increased by 89.4 percent to Rp 1.16 trillion in 1997, up from Rp 614 billion in 1996, the statement said.

The statement also said that other operating income rose to Rp 956 billion in 1997 from Rp 492 billion in 1996 due to an increase in foreign exchange gains.

However, bank operating expenses surged drastically, rising by 42.9 percent to Rp 1.20 trillion in 1997 from Rp 845 billion the previous year. The increase was due to the weak national currency, and the rising cost of human resources and investments required to maintain a program to automate the bank's retail outlets.

The bank's assets rose by 63 percent to Rp 57.17 trillion in 1997 from Rp 34.88 billion in 1996 as a result of the bank's gross loan expansion.

"Gross loans rose by 74 percent to Rp 40.73 billion in 1997 from Rp 23.40 billion in 1996," the bank said.

The bank collected total deposits worth Rp 29.30 billion in 1997 compared to Rp 19.09 billion in 1996, and its equity increased by 12.3 percent to Rp 3.17 trillion last year, up from Rp 2.83 trillion in the previous year.

However, the bank's capital adequacy ratio (CAR) fell to 8.31 percent in 1997 from 11.82 percent in 1996 due to the weak rupiah.

"The sharp depreciation in the rupiah brought our capital asset ration down because some of our assets are held in foreign currency while our equity is held in rupiah,' the statement said.

The bank's interest margin fell to 2.75 percent in 1997, down from 3.03 percent in 1996, due to an increase in deposit rates in the second half of the year. (aly)