Major national banks report massive losses

Major national banks report massive losses

JAKARTA (JP): Indonesia's major banks reported on Tuesday
massive losses during the first semester of this year due to a
widening negative interest spread and rising bad loan provisions.

Bank Niaga said it suffered Rp 4.99 trillion (about US$665
million) in net losses in the January-June period, swinging from
a net profit of Rp 32.18 billion in the same period last year.

The bank said the total interest spending swelled to Rp 1.73
trillion from Rp 1.44 trillion in the first half of last year
while its total interest income dropped sharply to Rp 673.64
billion from Rp 1.19 trillion.

As a consequence, the bank's net interest income plunged
deeper into the red to negative Rp 1.05 trillion during the
January-June period from negative Rp 252.47 billion in the same
period last year.

The bank's provisions for bad debts also surged to Rp 3.86
trillion from Rp 718.90 billion, resulting in a further
deterioration on its balance sheet.

Bank Niaga is one of several major banks taken over by the
government after their shareholders failed to come up with
sufficient funds to qualify for the government's recapitalization
program.

Other banks taken over by the government include Bank Duta,
Bank Nusa Nasional, Bank Risjad Salim International, Bank Tamara,
Bank Post Nusantara, Bank Danamon, Bank Tiara, Bank PDFCI, Bank
Central Asia and Bank Bali.

Bank Bali also reported on Tuesday a massive loss due to the
widening of its negative interest spread, in which the spending
to pay interest to depositors is higher than the interest raised
from its loans.

Bank Bali, currently at the center of a financial scandal,
said it suffered a net loss of Rp 1.55 trillion in the first
semester, as compared to a net profit of Rp 60.23 billion in the
same period last year.

The massive losses partly resulted from the sharp decline in
the bank's total interest earnings to Rp 779.71 billion from Rp
1.68 trillion in the first semester last year.

Bank Bali said its interest spending fell slightly to Rp 1.08
trillion from Rp 1.45 trillion, but this was little help to
improve financial performance due to a sharp drop in interest
income.

From the interest-based income alone, the bank suffered a loss
of Rp 301.17 billion from profits of Rp 230.01 billion.

The bank said the increase in the provision for bad debts of
Rp 960.62 billion from Rp 400.39 billion further worsened the
financial performance in the first half of the year.

The bank became the center of a widely publicized scandal
after it was discovered that Rp 546 billion of the bank's claims
from the central bank was transferred to a company controlled by
officials of the ruling Golkar Party.

The Supreme Audit Agency is investigating the case with the
help of Australia-based auditor PricewaterhouseCoopers.

Bank Duta, also one of the banks taken over by the government,
said it suffered a net loss of Rp 582.16 billion in the January-
June period, compared to a net profit of Rp 26.50 billion in the
same period last year.

The bank said that its total interest income fell to Rp 244.52
billion from Rp 468.30 billion in the same period last year,
while its interest spending rose to Rp 754.06 billion from Rp
566.24 billion.

As a consequence, the bank suffered a deficit of Rp 509.54
billion from interest-based operation alone, as compared to
negative Rp 97.94 billion in the same period last year.

Bank Duta's provisions for bad debts, however, were lowered to
Rp 9.4 billion, from Rp 615.18 billion in the first semester last
year.

Bank Tiara reported on Tuesday net losses of Rp 364.46 billion
in the first semester, rising from a Rp 40.36 billion loss in the
same period last year.

The bank said its total interest income dropped to Rp 285.88
billion from Rp 324.85 billion during the period, while its total
interest spending rose to Rp 675.14 billion from Rp 425.05
billion.

As a result, from interest-based operation alone, the bank
suffered a deficit or loss of Rp 389.25 billion, a deterioration
from a deficit of Rp 100.19 billion in the same period last year.
(hen)