Banks' earnings continue to rise, though higher interest rates might curb borrowing. (Bloomberg Photo/Dimas Ardian)
Strong demand for loans from consumers and corporations helped lift first-half profits at Bank Mandiri, Bank Central Asia, Bank CIMB Niaga and Bank Internasional Indonesia, though rising borrowing costs late in the second quarter threatened to curb lending.
Bank Mandiri, the biggest lender by assets, reported net income in the January-June period rose 16 percent to Rp 8.29 trillion ($808 million) from a year earlier, it said in a statement on Monday.
Net interest income — income from loans after deducting charges to depositors — rose 15 percent to Rp 15.4 trillion. Its total outstanding loans at the end of June climbed 22 percent to Rp 429 trillion.
At Bank Central Asia, the country's largest lender by market value, net income rose 19 percent to Rp 6.3 trillion.
Net interest income increased 24 percent to Rp 12.3 trillion. Total outstanding loan also rose at the same rate, by 24 percent, to Rp 280 trillion.
"Our positive performance in the first half 2013 was highlighted by strong credit demand and sustained growth in transaction banking activities," Jahja Setiaatmaja, president director of BCA, said in a statement.
Many lenders posted an increase in profit even as the pace of the country's lending growth started to slow.
Total outstanding loans at the country's 120 commercial banks rose 20 percent to Rp 2,953 trillion at the end of June from a year earlier, slower than the 22.2 percent gain in March and 21.9 percent rise in April.
Bank Indonesia deputy governor Halim Alamsyah said early this month that the slack growth mirrored a sluggish national economic performance so far this year. Halim noted that growth in consumer loans, such as credit cards and mortgages, slowed amid fears of rising inflation and higher interest rates.
The central bank raised its key interest rate — the policy rate — by a total of 75 basis points to 6.50 percent in the past two months, in a bid to curb impending inflation after the government in June raised subsidized fuel prices by an average 33 percent, threatening to push up costs for food, clothing and other goods.
Bank CIMB Niaga, the local unit of a Malaysian banking group, posted consolidated net income of Rp 2.13 trillion in the first half up 7.6 percent on the same period last year.
Its net interest income rose 5 percent to Rp 4.91 trillion. Total outstanding loans rose 10 percent to Rp 150.95 trillion at the end of June. The commercial segment contributed 41 percent of total loans, followed by consumers at 31 percent and corporation at 28 percent.
Bank Internasional Indonesia, a lender controlled by Malaysia's Malayan Banking, reported a 15 percent rise in net income to Rp 681 billion.
Its net interest income rose 9 percent to Rp 2.8 trillion, while fee-based income rose 5 percent to Rp 1.17 trillion.
Total outstanding loans at BII rose 16 percent to Rp 85.1 trillion at the end of June from a year earlier. Its business loans — covering small- to medium-size businesses, commercial and such — showed the fastest growth at 29 percent to Rp 30.2 trillion. Its retail loans rose 16 percent.
Khairussaleh Ramli, president director of BII, said in a statement on Monday that the first-half performance was "respectable," but raised concern for the rest of 2013 after the central raised its key interest rate.
"Going forward, while we applaud the pre-emptive actions to stem inflation by hiking interest rates, we can expect that loan growth will be affected for both the industry and for ourselves," Ramli said.
Still, he said that BII remained optimistic for the full-year's performance. Earlier this year BII said it was aiming to grow its lending by 22 percent for 2013.
