JAKARTA (TheInsiderStories) – Indonesian major banks recorded lower net profits in the six months to June 2015 amid uncertainty in global economy as well as moves by the banks to increase credit coverage ratios to over 100% to anticipate worsening global economy. Given this circumstance, most of banks revised down this year net profit target from double digit to single digit.
“Most of the 118 banks revised down their targets including loan growth from previous target of an increase of 16-17% to 13-15%, with modest level of 14 percent .We hope this target can be achieved at higher level,” Muliaman Hadad, Chairman of Financial Service Authority (FSA) told reporters last week.
In January to June of 2015, only state-own lender PT Bank Tabungan Negara Tbk (IDX : BBTN) and two medium banks have shown impressive performances. BBTN’s net profit rose 54.25% in first semester of the year from Rp539 billion to Rp831 billion. Net interest income (NII) reached Rp3.19 trillion from a year ago of Rp2.68 trillion or rose 19.06 percent.
Maryono, chief executive (CEO) of BBTN, said based on H1 performances, the bank is upbeat that the loan growth could rise by around 14 to 16 percent by the end of 2015. In first semester of 2015, total outstanding loans was recorded at Rp126.13 trillion or rose 18.33 percent from a year ago of Rp106.58 trillion. Non performing loans (NPL) dropped from 3.83 percent to 3.37 percent in the first half and targeted to fall further to 3 percent at the end of 2015.
The profitable bank in the country, PT Bank Rakyat Indonesia Tbk (IDX: BBRI) recorded net income of Rp11.9 trillion, inched up 2.2% from Rp11.7 trillion a year ago, as the bank setting aside part of the profit to increase the coverage ratios— a measure of protection against bad loans —at 141% of the total credit. The net bad loans (NPL) of the bank rose to 0.66% in the period from 0.57% in the same period last year.
The lender’s net interest income increased 2.8 percent to Rp25.8 trillion. BRI’s total outstanding loans expanded to Rp509 trillion, up 2.8 percent from a year ago and total outstanding loans reached Rp503.61 trillion, increased from Rp459.13 trillion, while its net interest margin (NIM) edged lower from 5.8% to 5.7%.
PT Bank Mandiri Tbk (IDX: BBMRI), the country’s biggest lender by assets fared better than fellow major lender PT Bank Central Asia (IDX : BBCA). The bank booked Rp9.92 trillion in net income in January to June, up by 3.5 percent in comparison to the corresponding period last year of Rp9.59 trillion.
Bank Mandiri sets aside nearly Rp4 trillion in provisions by up 40.7 percent from Rp2.8 trillion in the same period last year. Meanwhile, net non-performing loans ratio of the state lender rose to 1.01 percent from 0.81 percent. The increase in provision, according to president & CEO Bank Mandiri Budi Gunadi Sadikin, would raise the bank’s coverage ratio to 138 percent at end June.
In H1 2015, total outstanding loans as a group rose 13.8 percent to Rp552.8 trillion from a year ago of Rp485.8 trillion with net interest margins reaching 5.76 percent from 5.91 percent a year ago. The bank’s net interest income in first semester reached Rp21.20 trillion from last year of Rp18.62 trillion or up 13.86%.
Bank Central Asia’s net profit in first half of the year was recorded at Rp8.5 trillion, a 8.8 percent year-on-year (yoy) increase from Rp7.9 trillion a year ago. Jahja Setiaatmadja, BCA’s President Director, said the slowdown in the Indonesian economy affected the banking sector’s performance.
Total outstanding loans totaled Rp347.1 trillion at the end of June 2015, registering an 8.0 percent year-on-year increase. The Bank’s NPL’s remained low at 0.7 percent with a provisioned coverage ratio of 292.7 percent.
Compare to Bank Rakyat Indonesia, Bank Mandiri and Bank Central Asia, the other state bank PT Bank Negara Indonesia Tbk’s (IDX: BBNI) net profit dropped significantly to Rp2.43 trillion in H1 2015, plummeted by 50.8 percent from the Rp4.94 trillion a year ago.
BBNI CEO Achmad Baiquni said that the bank has raised the provisions for bad debts to anticipate a possible increase in NPL. The provision rose to 138.8 percent over the first six months from 128.9 percent last year. BNI aims to increase it to 139 percent by the end of the year. BNI’s lending portfolio rose 12.1 percent from H1 2014 to Rp288.7 trillion as of the end of June, while gross NPL has also risen to 3 percent from 2.2 percent in the same period last year.
Other lenders owned by foreign entity such as PT Bank Permata Tbk (IDX: BNLI) and PT Bank International Indonesia (IDX: BNII) posted a strong profit in first semester of 2015. Bank Permata, owned by PT Astra International Tbk (IDX: ASII) and UK Standard Charter Bank, reported a 5 percent increase in net profit to Rp837 billion in the first half of the year.
Its NII grew by 10.9 percent to Rp3.13 trillion from Rp2.69 trillion a year ago and total outstanding loans reached Rp130 trillion. Its gross and NPL ratios rose to 2.15 percent and 1.14 percent from 1.45 percent and 0.73 percent a year earlier.
Taswin Zakaria, president director at BII, said in a statement despite worse economic condition, the bank still recorded a strong profit growth supported by a strong growth in its net interest income. Net profit of the bank rose 13.9 percent to Rp 388 billion while its NII rose by 10.9 percent to Rp3.1 trillion and its Net Interest Margin (NIM) improved to 4.73 percent from 4.48 percent.
The bank which is controlled by Malaysia’s Maybank Bhd also reported an increase in bad loans this year as it feels the impact of the economic slowdown. The medium lender recorded a modest loan growth of 2.4 percent to Rp108.5 trillion as of June this year as net non-performing loan (NPL) ratio increased to 2.35 percent. (*)