BRI first-half profit rises 47 percent

BRI first-half profit rises 47 percent

Bloomberg, Jakarta

PT Bank Rakyat Indonesia (BRI), the nation's fourth-largest lender, said first-half profit rose 47 percent as lending expanded and interest margins improved. The bank said it's interested in bidding for smaller rival PT Bank Permata together with a state pension fund.

Profit in the six months ended June 30 rose to Rp 1.72 trillion (US$185 million), or Rp 146.28 a share, from Rp 1.17 trillion, or Rp 118.2 a share, a year earlier, President-Director Rudjito said in Jakarta. He didn't immediately provide per-share earnings.

Net interest income, or interest revenue from borrowers after interest was paid to depositors, rose 46 percent to 5.32 trillion rupiah from Rp 3.64 trillion a year earlier, he said.

BRI and other Indonesian lenders are benefiting as interest rates at six-year lows propel loan growth. Cheaper loans are helping to spur the construction of homes and shopping malls and fuel consumer spending, which already accounts for more than two-thirds of the $208 billion economy.

Shares of Bank Rakyat, which have risen 38 percent this year, fell Rp 50, or 3 percent, to Rp 1,600 on the Jakarta Stock Exchange. The earnings were released after the market close.

BRI's net interest margin, measuring the difference between what it charged for loans and paid for funds, rose to 11.69 percentage points from 8.86 percentage points a year earlier. Deposit rates have fallen faster than lending rates, helping make loans more profitable.

The average rupiah lending rate at Indonesian banks was 15.85 percent in the past six months, compared with 19.03 percent a year earlier, central bank data showed. The average six-month deposit rate was 6.13 percent in the first six months this year compared with 11.31 percent a year earlier.

BRI, a state-controlled lender with 3,931 branches across Indonesia, extended Rp 7.4 trillion in new loans for the period, putting it on target for full-year loans of Rp 11 trillion, its financial statement said. The bank made Rp 8.22 trillion of new loans last year.

"We will stick to that plan of lending Rp 11 trillion this year," Rudjito said.

It has outstanding loans of Rp 54.9 trillion. As of the end of June, the bank had assets of Rp 99.28 trillion, the statement said.

Most of BRI loans are to small-and medium-sized businesses.

BRI is interested in bidding for PT Bank Permata jointly with the state pension fund, Jamsostek, and is awaiting the fund's response to the proposal, Rudjito said at a press conference in Jakarta after announcing the results.

The government has set Aug. 27 as the deadline for potential investors to express interest in bidding for a 51 percent stake in Permata worth $394 million.