0 BRI books 22 percent growth in net profits

Publicly listed Bank Rakyat Indonesia (BRI) reported a significant increase in profits earned last year, thanks to growing non-interest income and an increase in the amount of recovered funds from bad debts. Indonesia’s second-largest lender by assets booked Rp 18.52 trillion (US$1.9 billion) in net profits in 2012, an increase of 22.79 percent from Rp 15.08 trillion on the previous year. “The increase was supported by the fall in the amount of non-performing loans, increasing fee-based income and lower costs of funds. 

We also unexpectedly booked about Rp 2 trillion from the recovery of bad debts recorded in the previous year,” BRI president director Sofyan Basir said during a press briefing on the company’s 2012 audited financial report in Jakarta on Thursday. BRI’s fee-based income and other non-operating income, including the recovery of written-off loans, reached a total of Rp 8.2 trillion as of the end of last December, jumping by around 47 percent year-on-year. BRI also enjoyed a 4.7 percent increase in interest income to Rp 35.4 trillion last year compared to a year earlier. 

BRI director for small and medium enterprises (SMEs) Djarot Kusumayakti said that the positive growth in the bank’s net profits also contributed to the increase in the lending portfolio to SMEs and the expansion of business networks and improved e-banking services. BRI total loans stood at Rp 348.23 trillion as of the end of last December, surging by 22.8 percent compared to Rp 283.58 trillion year-on-year. Djarot said that lending to the micro business sector had been accelerating since the second quarter of last year. The highest quarter-on-quarter growth recorded in the fourth quarter, reaching about Rp 5.73 trillion. 

BRI’s lending to the micro-sector totaled Rp 106.8 trillion last year, increasing by 18 percent compared to Rp 90.19 in the previous year. Meanwhile, loans to the medium enterprises segment stood at Rp 16.52 trillion as of the end of last year, a 19 percent rise compared to a year earlier. Sofyan said that BRI expected between 18 and 22 percent growth in total lending this year. “For net profits, we are expecting between 15 and 18 percent growth. We will pass Rp 20 trillion [in net profits] this year,” Sofyan said. With such a projected growth target, the bank would book net profits of between Rp 21.3 trillion and Rp 21.8 trillion by year-end. 

To maintain its business growth, BRI, which is majority-owned by the state, is planning to issue global five-year bonds worth in the range of $500 million to $1 billion this year. “We have appointed Citi and Standard Chartered as joint lead underwriters. We hope to enter the market in this first quarter,” said finance director Achmad Baiquni. He said the proceeds from the bond offering would be used to further expand the company’s lending portfolio especially to the micro business sector and SMEs. Many local banks have turned to the bond market to source cheaper funds to further strengthen their financing capacity.

source : the jakarta post