Mandiri, BCA enjoy higher net profits in Q1

JAKARTA. Indonesia’s biggest lenders, Bank Mandiri and Bank Central Asia (BCA), are reaping higher net profits in the first quarter of this year compared to the same period a year ago as lending has grown, indicating strong business and consumption demand in Southeast Asia’s biggest economy.

BCA, the nation’s largest lender by market value, reported a 26.7 percent increase in net profit in the first three months of this year to 
Rp 3.66 trillion (US$315.8 million) compared to the same period a year ago, driven by higher loan growth and net interest income (NII), which is the spread between interests paid out to depositors and interests earned from loans.

Outstanding loans grew 19.7 percent to Rp 317.27 trillion as of the end of March this year from the same period last year. 

Higher NII was primarily due to an increase in net interest margin (NIM), which is the difference between interest rates charged to borrowers and those applied to depositors. BCA’s NIM stood at 6.5 percent by the end of March this year, versus 5.9 percent a year ago. 

“Following Bank Indonesia’s move to jack up its benchmark interest rates, we decided to adjust our own rates as well,” BCA president director Jahja Setiaatmadja said. “Fortunately, our funding side was still dominated by low-cost funds. In the end, our NIM stayed at a higher level than in the first quarter last year.”

Low-cost funds or CASA accounted for 77 percent of BCA’s total deposits, which grew 10.6 percent to Rp 406.8 trillion as of March this year compared to March 2013.

According to BCA’s financial report, all of BCA’s credit segments recorded increases from January to March, with its consumer segment posting the highest increase.

While its consumer segment grew 21.6 percent to Rp 87.09 trillion, its corporate segment rose 21.1 percent to Rp 106.12 trillion, and commercial and small and medium enterprises segment climbed 17.4 percent to Rp 124.31 trillion.

Both BCA and Bank Mandiri are aiming for moderate lending growth this year, with BCA expecting 13 to 15 percent loan growth, while Mandiri has seen its lending grow by between 16 percent and 18 percent throughout this year.

State-owned Bank Mandiri is on track to meet the target after booking 20.1 percent growth in lending to Rp 470.4 trillion as per March this year compared to the same period last year.

Higher lending has boosted Bank Mandiri’s first quarter net profit by 14.5 percent to Rp 4.9 trillion.

The productive sector dominated the bank’s loan disbursement at more than 75 percent of overall loans, having grown by about 22.8 percent year-on-year up to March this year. Micro credit saw the biggest growth at 36.4 percent to Rp 28.2 trillion.

Bank Mandiri’s third party funds grew 13.8 percent to Rp 531.6 trillion as of March this year from March last year, which was lower than 15.7 percent third party funds growth in the first quarter last year.

Bank Mandiri finance director Pahala N. Mansury said there had been tight competition for third party funds during the first three months of this year.

Bank Mandiri commercial and business banking director Sunarso said the lender would focus on banking transactions with wholesale sectors to attract more third party funds for the rest of the year.

“We have the strongest relations in the wholesale and retail sectors. We will only look to pricing strategy if market conditions drive us to do so,” Sunarso added. (Anggi M. Lubis and Tassia Sipahutar)