Danamon's lending up by 78.6%

The Jakarta Post, Jakarta

Bank Danamon said that lending in the first half of this year jumped by 78.6 percent to Rp 23.72 trillion (US$2.89 billion).

The bank said in a press statement distributed late on Wednesday that a huge chunk of the credit -- 63.8 percent -- went to small- and medium-scale enterprises and consumer loans, while the remainder was in corporate and commercial loans.

The higher lending increased the bank's loan-to-deposit ratio to 66.2 percent in the first half ending June 30, compared to 37.7 percent in the same period last year.

But Danamon said the credit expansion had caused its capital adequacy ratio to fall to 24.2 percent from 32.7 percent, as the bank had to set aside provisions for the loans.

The publicly listed bank, which was acquired by Singapore's Temasek Holdings and Deutsche Bank AG in May, said that net profit in the first half rose by 49.6 percent to Rp 615 billion on the backs of its higher net interest income and fee-based income.

The rise in net interest income was due to a better interest margin, as the central bank had aggressively cut its benchmark rate during the first half. Subsequently, the time deposit rate declined, but the lending rate remained relatively high.

Danamon also said that its non-performing loans (NPLs) fell to 2.8 percent from 4 percent, well below the central bank's 5 percent cut-off point for NPLs.