Niaga books record profit in 2004

The Jakarta Post, Jakarta

The country's eighth largest lender, Bank Niaga, recorded a Rp 660 billion in consolidated net profit last year, a 41 percent increase from 2003.

Niaga president director Peter B. Stok said on Monday the profit increase was attributable mainly to higher net interest incomes -- boosted by its lending expansion -- and the proceeds from the sale of a subsidiary.

"It was contributed largely by an increase in our net interest income from Rp 1 trillion in 2003 to Rp 1.38 trillion in 2004," Stok said, adding that the sale of subsidiary company Niaga Finance Ltd. had contributed about Rp 121 billion to the bank's profit.

The contribution of bank credits to its net interest income rose to 77 percent last year, from 67 percent in 2003, Stok said.

The bank's lending increased by Rp 6.68 trillion to Rp 21.04 trillion in 2004 from Rp 14.41 trillion in 2003. The contribution of earnings from government bonds declined to 17 percent in 2004 from 23 percent the year before.

Stok said the bank was trying to increase its business lending especially to small and medium enterprises.

"We will try to disburse a minimal of 40 percent of our loans this year to SMEs by cooperating with rural banks and regional banks," he said.

Despite the soaring profits, the bank, partly owned by Malaysia-based Commerce Asset-Holding Berhad, experienced a decrease in its 2004 capital adequacy ratio (CAR) to 10.29 percent from 11.58 percent in 2003.

CAR measures a ratio between a bank's capital with its risk- weighted assets including loans. "This (decline of the CAR) is partly because of our wide expansion," Stok said.

Last year Niaga opened 53 branches and 65 ATMs. "We invested Rp 2 billion in each branch."

Commenting on the bank's plans to issue a subordinated debts in the first quarter of the year, Stok said Niaga was still waiting for the central bank's approval.

"Subdebt issuance is the most logical step in effort to raise more capital," he said.

The bank plans to issue US$100 million of subordinated debts. (003)