Lippo Bank books 445% profit hike

JAKARTA (JP): Publicly listed Lippo Bank announced a record 445 percent jump in profits yesterday to Rp 530 billion (about US$5.4 million) during the first half of the year compared to the same period in 1997.

The pretax profits were 450 percent above projections, the bank said.

The exceptional profit was mainly the result of current economic developments in which the bank was able to take in high interest earnings due to the central bank's high interest short- term promissory notes (SBIs), the bank said in a media statement.

The earnings are reflective of a one-time gain from the high interest rate environment and are not expected to be repeated, it explained.

It said the bank's board of directors had decided to allocate Rp 450 billion of the earnings to a special capital reserve fund to support its corporate and business customers, particularly in the distribution sector which has suffered financial hardships from the economic crisis.

The new Rp 450 billion allocation will supplement the Rp 268 billion already allotted to the fund, it added.

The bank also announced that its total revenues during the first semester ending on June 30 soared 270 percent to Rp 2.5 trillion from the same period in 1997.

"We entered the financial crisis with a strong balance sheet and liquidity position. We are now benefiting from being able to withstand the turmoil," Lippo Bank president Eddy Sindoro said.

The strong balance sheet reflects a relatively low loan-to- deposit ratio (LDR) of 83.73 percent against the industry's average of over 160 percent, Lippo said.

It added that the bank's liquidity ratio was currently at 31 percent -- meaning that for every Rp 100 in deposits, Lippo maintained Rp 31 in cash-liquid assets.

"This compares favorably with the minimum liquidity reserve requirement ratio of just 5 percent. Lippo is a major and consistent net placer of excess funds in the interbank market with a cash liquidity position of over Rp 3 trillion," it said. (rei)