BRI net profit rises 41% to Rp 3.63t

Leony Aurora, The Jakarta Post, Jakarta

Bank Rakyat Indonesia (BRI), the country's fourth largest lender by assets, has reported an increase of 40.89 percent in its net income last year to Rp 3.63 trillion (US$386.17 million).

The high net income resulted from an expansion in lending and a lower interest burden.

The audited profit exceeded the bank's forecast, president director Rudjito told a press conference on Tuesday.

BRI had estimated that net income last year would rise slightly to Rp 2.6 trillion from the Rp 2.58 trillion booked in 2003.

Rudjito said the better performance was due to the country's improving economy, which grew by 5.1 percent last year.

BRI extended Rp 14.77 trillion in fresh loans last year, 31 percent more than in 2003. Almost 91 percent of the new loans went to its core business, micro-, small- and medium-sized enterprises.

Outstanding loans by the end of 2004 stood at Rp 62.37 trillion, with a loan to deposit ratio (LDR) of 75.69 percent.

The bank's capital adequacy ratio (CAR) stood at 17.89 percent, down from the 19.64 percent recorded at the end of 2003.

Indonesian bank earnings have risen on the back of falling interest rates, which has stoked corporate borrowing and consumer spending. The central bank has said, however, that it might increase its benchmark interest rate this year to stem inflation.

The amount of overall funds in clearing and savings accounts, which offer lower interest rates than time deposits, rose to 70.31 percent from 65.41 percent in 2003, cutting the bank's interest burden to Rp 4.77 trillion last year from Rp 7.04 trillion previously.

With a lower interest burden and more aggressive lending, net interest rose by Rp 2.7 trillion to Rp 10.71 trillion.

Rudjito said the bank was aiming at increasing net profit by 22 percent this year and to extend between 22 percent and 25 percent more fresh loans than it did last year.

"We still have room to extend more loans, as some Rp 24 trillion of our funds are in government bonds," he said.

As of the end of 2004, the total assets of BRI, which has thousands of village branches spread across the archipelago, stood at Rp 107.04 trillion, a 13 percent increase from the Rp 94.71 trillion recorded at the end of the previous year.