News Column

Indonesia : BII Continues to Record Strong Loan Growth of 25% YoY

July 25, 2014

PT Bank Internasional Indonesia Tbk ( BII or the Bank ) today reported that operating profit before provision for the half year ended 30 June 2014 increased 13.5% to Rp1.3 trillion compared with Rp1.2 trillion in the same period last year. Net profit after tax and minority Interest (PATAMI) for the first semester ended 30 June 2014 reached Rp336 billion while profit before tax stood at Rp511 billion, compared with Rp681 billion and Rp966 billion in June 2013. This was primarily due to continued compression in net interest margin as well as higher provisioning recorded from some corporate customers impacted by the challenging market conditions.

The Bank saw healthy loans growth of 25% year-on-year (y-o-y) to Rp106.0 trillion as of 30 June 2014 with Business Banking growing by 26.8% from Rp30.2 trillion to Rp38.3 trillion, while loans from Retail Banking rose 23.4% from Rp31.1 trillion to Rp38.3 trillion, and loans from Global Banking increased 23.1% from Rp23.9 trillion to Rp29.4 trillion.

The Bank continued to manage liquidity prudently by prioritizing the maintenance of a healthy liquidity reserve. Customer Deposits increased 16.2% during the first semester 2014 to Rp105.9 trillion from Rp91.1 trillion in same period last year. Savings deposits grew 19.7% from Rp20.3 trillion in June 2013 to Rp 24.3 trillion in June 2014. Current accounts grew 8.6% while time deposits increased 17.0%.

Tight liquidity situation experienced by banking industry in the first half 2014 which has led to increasing cost of fund has impacted the Bank s Net Interest Margin (NIM) which declined from 5.34% to 4.75%.

The Loan-to-Deposit ratio (Bank only, excluding subsidiaries) remains at a healthy level, reaching 90.80% as of 30 June 2014, while the Bank s modified consolidated LDR which includes senior bonds, long term borrowings and customer deposits stood at 82.77%.

To further improve its long term funding composition and strengthen its tier 2 capital, the Bank has successfully completed the issuance of Rp 1,5 trillion Subordinated Bonds and Rp 300 billion Sukuk Mudharabah. The Bank received an idAA+ rating from PT Pemeringkat Efek Indonesia (PEFINDO) and AA(idn) rating from PT Fitch Ratings Indonesia (Fitch) for this Subordinated Debt, while for the Sukuk Mudharabah, Pefindo assigned idAAA(sy) and Fitch has rated it AAA(idn)(sy).

Provision to the regulatory approval for inclusion of Subordinated Bond as Tier 2 Capital, total net proceeds resulting from the Subordinated Bond will increase the Bank s Capital Adequacy Ratio (Bank only) from 11.93% to 13.30% based on June 2014 pro-forma.

The Bank also saw positive performance in other areas of its operations. Under Business Banking, the Small and Medium Enterprises (SME) loan portfolio recorded 35.3% growth from Rp 11.8 trillion in June 2013 to Rp 15.9 trillion in June 2014 while maintaining sound asset quality.

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Source: TendersInfo (India)

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