BRI enjoys profit in H1

JAKARTA (JP): State Bank Rakyat Indonesia (BRI) said on Tuesday that it had enjoyed an operating profit of Rp 856 billion (US$97 million) in the first six months of this year, compared to Rp 519 billion in losses in the same period last year.

BRI president Rudjito said at a media conference that the first-half profit mainly resulted from an increase in interest income to Rp 5.2 trillion from Rp 3.5 trillion.

He said that 61.3 percent of the interest income was generated by the bank's lending business.

"BRI has channeled some Rp 30.5 trillion in credit in the first semester, or an increase of 29.6 percent compared to the same period last year," Rudjito said.

He added that the bank's loan to deposit ratio in the first half reached 56.5 percent.

Indonesia's banking sector was badly hit by the financial crisis that struck the country in the middle of 1997. While some banks have recently started to announce a profit, most profit has come from interest revenue on government bonds. Many of the existing major banks have been injected by government bonds to help them stay afloat.

Rudjito said that lending to small and medium-sized enterprises (SMEs) and the retail sector in the first semester totaled Rp 3.6 trillion, or 80.6 percent of the bank's total lending portfolio.

The government, under pressure from the IMF, is determined to restructure BRI's operation by focusing the bank on micro-lending activity.

In the past, the bank had been active in channeling large loans to the corporate sector.

Asked about BRI's initial public offering (IPO) plan, Rudjito said that the bank was ready if the government decided to divest its shares.

"The problem is whether the market can absorb it or not. We are ready if the IPO plan is accelerated as long as the market is conducive," he said.

The government has also promised international donors to privatize state banks in a bid to restructure the ailing banking industry.(11)