NISP's 2004 profit rises 63% on lending

NISP's 2004 profit rises 63% on lending

Bloomberg, Jakarta

PT Bank NISP, an Indonesian lender partly owned by Singapore's Oversea-Chinese Banking Corp., said net income in 2004 rose 63 percent as low interest rates and faster economic growth boosted demand for loans.

Profit rose to Rp 288.1 billion (US$31 million), or Rp 69.7 a share, from Rp 176.7 billion, or Rp 42.8 a share, in 2003, the lender said in an e-mailed statement today. Net interest income, or interest earned on loans after deducting interest paid to borrowers, rose 43 percent to Rp 642.35 billion.

NISP and other Indonesian lenders are benefiting from an expanding economy forecast by the government to grow as much as 5.5 percent this year, after growing 5.1 percent in 2004, the fastest pace in eight years. Consumer spending makes up about 70 percent of Indonesia's $208 billion economy.

To meet growing demand, the lender opened 26 new branches last year, taking its total to 160, NISP said. The bank had extended Rp 10 trillion in loans in 2004, 6 percent more than a year earlier, the statement said.

Falling interest rates have helped boost bank profits by spurring demand for loans. Deposit rates have fallen faster than lending rates, improving banks' interest margins. The average six-month deposit rate was 6.2 percent last year compared with an average lending rate of 15.6 percent.

NISP said net interest margin, or the difference between what a bank charges for loans and pays for funds, widened to 4.67 percent last year from 3.69 percent in 2003.

Oversea-Chinese, known as OCBC, will boost its stake in Indonesia's 11th-largest lender to 51 percent by June after it paid S$119 million ($72.4 million) to buy 22.5 percent of Bank NISP last year.

Bank NISP's shares more than doubled in 2004, outpacing a 45 percent gain in the benchmark Jakarta Composite Index, according to data compiled by Bloomberg. The stocks were unchanged at Rp 810 at close on the Jakarta Stock Exchange on Friday.