Permata's profit rises 12% on lower costs

Permata's profit rises 12% on lower costs

Bank Permata, in which Standard Chartered Plc. bought a stake last year, said profit in 2004 rose 12 percent as the lowest interest rates in six years helped it cut funding costs and boosted demand for loans.

Net income in the year ended Dec. 31 rose to Rp 630.5 billion (US$$69 million), or Rp 80 a share, from Rp 564.5 billion, or Rp 72 a share, in 2003, the lender said in a press statement.

"Most Indonesian banks benefited from an expanding economy and improved political climate last year," said Irvin Patmadiwiria, who helps manage the equivalent of $217 million at PT Batavia Prosperindo Aset Management in Jakarta. Patmadiwiria doesn't own Permata shares.

Faster economic growth is stoking corporate borrowing and consumer spending in Southeast Asia's biggest economy, which is forecast by the government to expand 5.5 percent this year, the most in nine years, after estimated 5 percent growth last year. Interest rates fell to their lowest in six years in 2004, spurring demand for bank loans and cutting deposit costs.

Permata, Indonesia's seventh-largest lender, said net interest income, or interest earned on loans after deducting that paid for deposits, rose to Rp 1.58 trillion in 2004 from Rp 1.16 trillion in 2003. Interest costs dropped 33 percent to Rp 1.38 trillion.

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.

Permata's assets rose to Rp 31.7 trillion as of Dec 31, 2004 from Rp 29.03 trillion in 2003, the lender's statement said.

Permata is controlled by Standard Chartered, a U.K. lender that makes two-thirds of its profit in Asia, and PT Astra International, Indonesia's biggest auto distributor, which jointly paid Rp 3.4 trillion for 62.2 percent of the lender.

The government, which still owns 26 percent of the lender, plans to sell its remaining stake this year to raise fund to cover a budget deficit estimated at more than Rp 17.4 trillion. -- Bloomberg