Mandiri profit to grow 10-20% next year
Mandiri profit to grow 10-20% next year
Rendi A. Witular, The Jakarta Post, Jakarta
Publicly listed Bank Mandiri, the country's largest bank in
terms of assets, said on Thursday net profit for 2004 was
expected to grow by between 10 percent and 20 percent on higher
income from lending.
"Based on our performance projection, next year our profit
could grow by between 10 and 20 percent," said Mandiri president
I.C.W. Neloe prior to a hearing with House of Representatives
Commission IX for finance and banking.
Neloe said the bank's net profit this year was expected to
reach about Rp 4 trillion (US$470 million), up from Rp 3.5
trillion in 2002.
He said the growth would mainly be attributable to an increase
in the bank's lending activity this year, with loan exposures
projected to increase by about Rp 8 trillion to Rp 73.4 trillion.
As of September this year, the bank had channeled credits
totaling about Rp 70 trillion, of which about 65 percent went to
the corporate sector.
Analysts fear that the high exposure to the corporate sector
could harm Mandiri's profitability in the future, as the sector
is still considered volatile and prone to default.
Last month, Neloe said the bank might miss this year's lending
target for the corporate sector because the overall business
climate remained unfavorable.
He said there were two reasons the bank might miss the target:
first, some companies were still reluctant to expand their
businesses because of the poor investment climate and a lack of
incentives from the government.
Second, banks still consider lending to the corporate sector a
risky business because of the slow debt restructuring process in
the sector.
Mandiri has listed several sectors that it considers risky,
including the textile, forestry and footwear sectors, because
their competitiveness in the international market has declined.
The bank said that as of the third quarter of this year, its
loan to deposit ratio had increased to 39.5 percent from 30.2
percent in the same period last year. Mandiri's capital adequacy
ratio declined to 22.3 percent from 29.5 percent at the end of
last year.
Neloe did not provide details for the cause of the decline or
other information on the bank's third quarter performance.