Niaga reports 42% profit hike
The Jakarta Post, Jakarta
Publicly listed Bank Niaga, the nation's ninth largest bank in term of assets, reported on Monday a 42 percent increase in its first-half unaudited net profit as compared to the same period last year, due mostly to a strong showing in its lending business.
Niaga president Peter B. Stok said the publicly listed lender posted a net profit of Rp 301.9 billion (about US$33.5 million) in the period ending June 30, as against Rp 212 billion in the corresponding period the year before.
The profit increase was attributed in particular to rapid loan expansion, which had in turn boosted its net interest income -- interest earned from borrowers after deducting the interest paid to depositors, he added.
"Some 71.6 percent of the total net interest revenue had come from interest from credits," Peter said, adding that this represented an increase over the same period last year in which income from lending accounted for 64.9 percent of total net interest revenue.
Net interest income rose by 60 percent from Rp 442.1 billion as of June last year to Rp 707.6 billion in the first semester of this year.
Another source of interest revenue was government recapitalization bonds, although their share declined to 21.7 percent from 28.1 percent the year before.
Most banks here have benefited from the significant decline in the central bank's benchmark interest rate (SBI), which allows banks to increase their lending to consumers at more affordable rates. The lower SBI rate has also pushed down interest rates on time deposits and savings.
As with other banks, Niaga is reaping hefty profits from the gap between its lending rates and the interest it pays on deposits. At present, Niaga's annual borrowing rates are in double digits as compared to around the 6 percent to 7 percent it pays to depositors.
Niaga has a network of 16 branches and about 3,500 employees, and is controlled by Malaysia's Commerce Asset-Holding Bhd., which holds a 52.8 percent stake in the bank. The government, through the Asset Management Company (PPA), owns 21.5 percent, while the public holds about 25.65 percent of the bank's shares.
Aside from interest gains, the bank's profit surge was also driven by gains in non-interest income, which rose by 5.3 percent to Rp 267.9 billion from Rp 254.6 billion previously.
Meanwhile, it was also revealed that the bank's plan to issue new shares as part of a rights issue would be postponed from the end of August as originally planned as the bank was still working out the details.
Niaga's financial indicators
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2004* 2003* ----------------------------------- Net profit (Rp) 301.9b 212b Loans (Rp) 16.5t 11.8t LDR (%) 78.7% 64.1% CAR (%) 11.6% 12.5% ----------------------------------- * As of June Source: Niaga