Lippo records 47% income growth on lending expansion

The Jakarta Post, Jakarta

Publicly listed Bank Lippo, which was recently acquired by Malaysia's Khazanah Nasional Berhad, reported on Tuesday almost a 50 percent surge in income in the first nine months of the year.

Lippo's unaudited net income increased by 47 percent to Rp 343.8 billion (about US$34.1 million) from Rp 233.6 billion in the same period last year.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, rose 36.8 percent to Rp 879.4 billion from Rp 642.9 billion last year, predominantly on higher lending.

The bank reported it had extended Rp 7.35 trillion in loans in the first nine months of the year, from Rp 5.4 trillion in the same period last year.

Some 48 percent of its loan went to small and medium enterprises.

Lippo processes an average of Rp 530 trillion in payments each month, according to Lippo president director Jos Luhukay during the company's public expose.

He said Lippo would likely reach its Rp 8 trillion full-year lending target on the back of low interest rates.

"We are not burdened by time deposit rates since we have a healthy financing composition. That allows us to hood our lending rates," Jos said.

The bank's funding structure consists of 40 percent savings, 35 percent demand deposits and 25 percent time deposits.

"We would like to maintain this composition to lower our cost of fund," he said.

Lippo's capital adequacy ratio rose to 21.8 percent from 17.4 percent in the first nine months of 2005, with nonperforming loans falling to 2 percent from 2.6 percent during the same period in 2004.

Bank Lippo is majority owned by Santubong Investments B.V -- a subsidiary of Khazanah Berhad -- which since Oct. 1 has held a 52.05 percent stake in the bank.

The Lippo Group, through PT Lippo E-Net, holds a 5.57 percent of Bank Lippo, the government 2.48 percent and the public holds the remaining 39.9 percent.