Islamic Bank profits up by nearly 70% : Report

Islamic Bank profits up by nearly 70% : Report

JAKARTA (JP): Bank Muamalat Indonesia, Indonesia's first
Islamic bank, reported a nearly 70 percent increase in its
profits, to Rp 6.02 billion (US$2.8 million) last year from Rp
3.71 billion in 1993.

The bank's president Zainulbahar Noor said yesterday that the
substantial increase in the bank's profits was largely due to the
sharp increase in its revenues from operations.

"The income from revenue-sharing businesses alone surged to Rp
27.80 billion last year from Rp 17.97 billion in 1993,"
Zainulbahar said in a hearing with the Banking, Insurance and
Trade Commission of the House of Representatives.

The bank's problem loans, comprising of non-performing,
doubtful and bad loans, amounted to 1.35 percent of its
outstanding loans of about Rp 190.29 billion last year, he said.

"The bad loans represented only 0.56 percent of outstanding
credits," he said.

Bank Muamalat Indonesia, which bases its operations on the
Islamic banking principles, provides no interest for its clients
but instead offers them a profit sharing arrangement.

However, Zainulbahar said the bank, being a unique bank, often
faces difficulties in raising funds from the public as well as in
channeling them as loans.

The bank was established in May 1992 to serve Moslems who
consider that taking or paying interest in banking transactions
prohibited.

Zainulbahar said the bank, which at present has four branches,
will continue to expand its operational network to improve its
market shares in Indonesia's banking industry.

"We also help the establishment of secondary Islamic banks to
support the bank's operations at district levels," he said,
adding that the increase in the number of secondary Islamic banks
will make the transactions faster and more efficient.

According to the unaudited 1994 financial statement, ended in
December, the bank's total assets as of last December reached Rp
245.82 billion ($113.95 million), an increase of nearly 50
percent form Rp 167.02 billion as of the end of 1993.

The bank, which is majority owned by the public, recorded a
capital adequacy ratio of 41.9 percent in December last year, far
above Bank Indonesia's minimum requirement of eight percent, with
the loan to deposit ratio amounting to 80.90 percent, lower than
the minimum 110 percent requirement.

In the same period, the bank's rate of return on asset was
recorded at 2.44 percent and rate of return on equity at 5.78
percent, Zainulbahar said. (hen)