Wed, 01 Sep 1999

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)