Niaga profit little changed

Niaga profit little changed

Naila Firdausi and Soraya Permatasari, Bloomberg, Jakarta

PT Bank Niaga, an Indonesian bank controlled by Malaysia's second-biggest lender, posted nine-month net income that was little changed, as tighter loan regulations and a rise in interest rates hurt banks' profits.

Net income in the nine months ended Sept. 30 rose to Rp 436 billion (US$43 million), a 0.2 percent increase from Rp 435 billion a year earlier, the Jakarta-based lender said in a statement published on the stock exchange Web site.

Net interest income, or revenue from borrowers after deducting interest paid to depositors, rose 21 percent to Rp 1.32 trillion, from Rp 1.09 trillion a year earlier.

Profit growth at Indonesia's commercial lenders may slow after the central bank raised interest rates in a bid to control inflation and boost the rupiah. Bank Indonesia has raised its benchmark interest rate by 2.5 percentage points since July to 11 percent on Oct. 4, the highest in more than two years.

The central bank has tightened bad-loan rules. It's requiring commercial lenders to classify as a loan loss any loan on which no principal or interest has been paid for 180 days, reducing the period from 270 days. Loans to a borrower owing money to two or more banks will all be considered bad should just one go into default.

Niaga's net non-performing loans rose to 4.23 percent of total loans, from 3.31 percent a year earlier.

Bank Niaga, 61.5 percent owned by Commerce Asset-Holding Bhd. of Malaysia, said outstanding loans rose to Rp 27.8 trillion as of the end Sept 30, 2005, from Rp 18.7 trillion a year earlier.

Shares of Bank Niaga, which have fallen 11.4 percent since the beginning of this year, rose Rp 5, or 1.4 percent, to Rp 365 at the close of trading on the Jakarta Stock Exchange today. The earnings were announced after trading hours.