Mandiri posts strong profit in first half

The Jakarta Post, Jakarta

Bank Mandiri, the country's largest lender by assets, said on Monday it had posted a 37.2 percent increase in its net profit in the first semester this year as compared to the same period last year.

The publicly listed bank's after-tax profit reached Rp 3.1 trillion (some US$330 million) as of June, up from Rp 2.2 trillion in the same period in 2003, the company said.

The net profit increase was largely because of a 36.7 percent rise in net interest income -- the margin a bank receives between interest expenses paid to depositors and interest revenue it gets from creditors.

Mandiri, along with most banks here, is enjoying hefty interest earnings in line with a declining trend in the Bank Indonesia's benchmark interest rate (SBI). Banks in Indonesia generally adjust their deposit rate downwards in line with the SBI faster than they decrease their lending rates.

Mandiri's net interest income stood at Rp 5 trillion in the first half of this year, up from Rp 3.6 trillion for the same period last year.

Other crucial indicators that gauged a bank's financial health were also encouraging, the statement said.

The bank's capital adequacy ratio (CAR) was at 27.5 percent, far above the 8 percent minimum requirement set by the central bank. However, its non-performing loans (NPLs) rose from 7.3 percent in the first semester 2003 to 8.2 percent as of June this year.

CAR compares a bank's capital with its risked-weighted assets including loans.

As of June, Mandiri boasted total assets of Rp 234.7 trillion, including Rp 102.3 trillion worth of government bonds.