Indon banks post profit gains as debt provisions grow

Bank Mandiri and Bank Central Asia both showed profit gains over the first quarter, but Bank Negara Indonesia was the standout with a 315 percent increase in profit to US$59 million.

BNI acknowledged the role of cutting operational costs in increasing the bank’s net profits, according to a report by The Jakarta Post. The bank also showed a 24 percent increase in its net interest margin and 44 percent growth in fee-based income.

BCA, on the other hand, reported a 41.8 percent increase in net profits, with net interest margin growth of 51 percent and fee-based income increase of 31.9 percent.

Bank Mandiri, setting aside huge provisions for bad loans, saw a 0.8 percent increase in its net profit. Compared to the first quarter of 2008, the bank enabled a 346 percent increase in its provision funds for this year. Pahala N. Mansury, Mandiri chief financial officer, said the provisions were allocated to maintain the bank’s ratio of non-performing loans (NPLs) at below 5 percent. Mandiri’s NPL ratio for 1Q 2009 is at 1.46 percent.

Meanwhile, BNI improved its NPL ratio from 3.2 percent to 1.5 percent. BCA, seeing its NPL ratio move from 0.8 percent to 1.6 percent, is targeting a conservative 15 percent growth in lending for 2009.