BRI first half profit may rise by 36% on lower cost
BRI first half profit may rise by 36% on lower cost
Rendi A. Witular, Jakarta
Publicly listed Bank Rakyat Indonesia (BRI), the nation's
fourth largest bank in terms of assets, said that net profit in
the first half of this year is estimated to rise by more than 36
percent from the same period of last year, due mostly to the
lower cost of funds.
BRI president director Rudjito said the bank was expecting to
book profit of between Rp 1.5 trillion (US$166 million) and Rp 2
trillion in the first six months of this year, up from Rp 1.17
trillion in the same semester of last year.
"Our profit is estimated to rise higher this first half to at
least Rp 1.5 trillion, benefiting from lower interest rates that
reduce costs for paying interest to our depositors," said Rudjito
during an exhibition on Thursday.
Rudjito explained that most local banks this year had been
enjoying higher profits amid the declining trend in Bank
Indonesia's benchmark interest rate, which helped pushed down
interest rates for savings and deposits, thus reducing the cost
of funds.
"The low cost of funds plays a greater role in the rising
profits of most banks compared to lending activities. Lending
remained flat because of uncertainty in the business sector
during the general election, denting demands for loans," he said.
BRI shares ended lower by Rp 25 to Rp 1,725 on the Jakarta
Stock Exchange on Thursday on profit taking.
Elsewhere, Rudjito said that the bank was still undergoing a
feasibility study before joining the tender process for a
controlling stake in its smaller rival Bank Permata, the
country's seventh largest bank in terms of assets.
"We are still studying whether we can form a synergy of
operations with Permata, since the bank focuses its business more
on the consumer and commercial sector," he said, adding that BRI
still had time until Aug. 13 to officially file the bid.
BRI is known as the world's largest micro bank with 3,931
branches across the archipelago, mostly located in remote areas.
The bank plans to join the Permata bid by forming a financial
consortium comprising local investors. However, the bank will not
lead the consortium due to the central bank regulation that
limits a bank to invest no more than 10 percent of its equity in
a single entity.
"Although we will become a minority investor in the
consortium, that doesn't mean our role will be minor. The
investment is still strategic for our future growth," said
Rudjito.