BRI profits up 24% on surging fee income

JAKARTA. State-owned bank Bank Rakyat Indonesia (BRI) reported a 24.77 percent growth in its net profits to Rp 13.01 trillion (US$1.2 billion) during the first nine months of this year on the back of a sharp increase in the company’s non-interest income.

BRI saw its net-interest income rise slightly by 0.01 percent to Rp 25.98 trillion from January to September, partly due to the fall in the interest rate.

BRI finance director Ahmad Baiquni said on Wednesday that the bank had lowered its lending rate by between 1 and 1.5 percent in line with the central bank’s benchmark rate, which was kept at a record low of 5.75 percent early in October for an eighth consecutive month.

Despite flat growth in the interest income, BRI enjoyed a 35 percent increase in fee-based income to Rp 5.27 trillion.

Although the growth in interest income was relatively small, the sharp increase in the fee-based income helped push up net profit growth, Baiquni said.

“The increase in fee-based income was supported by trade finance, payment services, fees from [transactions through] ATMs [automatic teller machines] and in the future, we’ll be expecting support from SMS [short message service] banking,” BRI president director Sofyan Basir said.

As of the end of September this year, BRI has a total of 11,623 units of ATMs across the country,
an increase of about 72 percent compared to 6,733 units in the same period last year. The bank also has 37,507 electronic data captures (EDCs) as of the end of September, an increase of about 97 percent from 24,973 units in the same period last year.

BRI’s outstanding loan rose 15.3 percent to Rp 318.01 trillion at the end of the third quarter of the year from Rp 309.71 trillion in the same period last year. The bank’s lending growth was lower compared to the national figure, which reached about 23 percent.

Sofyan said that BRI had limited the credit expansion to avoid the negative impact from the global crisis.

“We’ve learned that our NPL [non-performing loan] level is higher in a time of crisis. Therefore, we’ve become more careful. The result is that our lending growth is lower as well as our NPL, meaning that we have better credit quality,” Sofyan said.

Micro credits, which is BRI main business and accounted for about 31 percent of its credit portfolio, rose 15.1 percent up to the third quarter compared to the same period last year. The increase was lower than a 20 percent growth in 2011.

“The increase in micro lending was not as big as it was previously due to lower interest rates and the increasingly competitive market where more banks have entered the micro lending business. The lower increase in our micro lending contributed to a lower NIM [net interest margin],” Ahmad said.

BRI’s NIM dropped to 8.43 percent in the first nine months of the year compared to 10.01 percent in the same period last year.

“We are expecting to maintain NIM at 8.3 to 8.4 percent this year,” Ahmad said. (Raras Cahyafitri/The Jakarta Post)