NISP reports 121% jump in net profit
The Jakarta Post, Jakarta
Medium-sized bank NISP announced on Wednesday a 121 percent surge in first semester net profit on the back of strong net interest income in an industry where major banks have largely been unable to restore their lending operations since the late 1990s financial crisis.
NISP president Pramukti Surjaudaja said on Thursday the publicly-listed bank's unaudited net profit for the first six months of this year was Rp 70.6 billion (about US$8.2 million) compared to Rp 32 billion in the same period last year.
He attributed the higher profit to strong net interest revenue, which jumped by 92 percent in the first half ending June 30 to Rp 195.5 billion from Rp 101.5 billion previously.
"The increase in interest income was in line with the bank's (strong) lending activities," Pramukti was quoted by Antara as saying, adding that new lending during the period increased to Rp 7.17 trillion from Rp 4.42 trillion in the previous period.
He also explained that some 64.4 percent of the new loans were channeled to corporations as working capital, 19.6 percent in the form of consumer loans, and the remaining 16 percent to finance investment activities.
The publicly-listed NISP, which was relatively unscathed by the late 1990s banking crisis, has been active in lending to the retail sector and to small and medium enterprises (SMEs).
This is in contrast to the situation faced by the country's major banks, which despite already having been rescued by the government through the use of huge amounts of public money, have still been unable to restore their lending businesses, thus limiting their sources of revenue to income from government recapitalization bonds and other fixed-income sources. Recently, the central bank has been putting pressure on these banks to boost their lending following the sharp cut in Bank Indonesia's benchmark interest rate.
Most major banks have been unable to quickly resort to retail lending or financing SMEs due to both a lack of infrastructure and expertise.
The publicly-listed Bank BNI, which is among the top five banks in the country, had earlier reported only a slight increase in first half net profit to Rp 1.55 trillion from Rp 1.51 trillion previously.
Elsewhere, Pramukti said that NISP would continue to focus on lending to SMEs and the retail sector as the corporate sector was still considered risky.
During the first semester, the bank also managed to reduce its non-performing loans (NPLs) to 1.2 percent from 2.16 percent, while its capital adequacy ratio (CAR) stood at a healthy 17.05 percent.
Pramukti said that the bank had cut its interest rate on loans to 16.5 percent from the previous 17 percent.
He also said that full-year net profit was expected to increase by between 30 percent and 40 percent.
Meanwhile, Pramukti said that Bank of the Philippine Islands (BPI) was unlikely to pursue its plan to buy a 20 percent stake in NISP after talks between BPI and NISP shareholders stalled.
"They couldn't reach agreement on prices and other items," he was quoted by Dow Jones as saying.
BPI, the Philippines' second largest bank in terms of assets, confirmed in March it was in negotiations to buy a stake in NISP.
The three shareholders that want to sell their stakes in NISP are Moore Investment Ltd., which holds a 4.12 percent stake, Hurst Investment Ltd., which holds a 7.8 percent stake, and Stiles Investment Ltd., which has a 7.8 percent stake.
Pramukti added that a number of investors from Southeast Asia and Europe were currently also looking to buy these stakes. He refused to name them.
NISP shares were unchanged at Rp 220 on Thursday amid an overall weak market sentiment.