Bank Permata Swings to Loss in 2016 Amid Rising Costs, Nonperforming Loans

Bank Permata has returned to the black following efforts to restructure bad debt. (ID Photo/David Gita Roza)

By : Tabita Diela | on 6:28 PM February 17, 2017
Category : Business, Banking/Finance

Jakarta. Bank Permata, a lender controlled by diversified local conglomerate Astra International and UK-based lender Standard Chartered, swung to a net loss of Rp 6.5 trillion ($487 million) in the 2016 fiscal year, amid rising costs and soaring nonperforming loans, it said in a financial statement published at the Indonesia Stock Exchange on Thursday (16/02).

Permata, Indonesia's fifth-largest commercial lender by assets, booked a Rp 247.1 billion profit in 2015.

The lender's total operating expenses more than doubled to Rp 16.8 trillion from Rp 8.1 trillion a year earlier.

Net interest income – or income from interest paid by borrowers after deducting interest paid to depositors – dropped by 5.1 percent to Rp 5.9 trillion from a year earlier.

The lender's fee-based income, which includes banking fees, commission and other operating income, meanwhile increased by 5.4 percent to Rp 2.3 trillion.

Third-party funds – including savings and current accounts and time deposits – dropped 12.2 percent to Rp 117.1 trillion.

Total outstanding loans declined by 24.7 percent year-on-year during the period to Rp 94.8 trillion, as the lender implemented a more prudent practice in disbursing loans to borrowers amid unfavorable economic conditions.

Permata said in a separate statement on Thursday that avoided last year exposure to industries that are directly affected by the global economic slowdown such as mining, real estate and manufacturing.

The bank's poor performance in lending growth last year contrasts with the sector's 7.9 percent growth.

The total value of Bank Permata's assets declined 9.4 percent to Rp 165.5 trillion, as lower lending dragged down the overall figure.

Other statistics were not encouraging either. The lender's gross nonperforming loans stood at 8.8 percent last year, up from 2.7 percent in 2015. That exceeds the central bank's maximum threshold of 5 percent.

However, the lender managed to maintain a prudent capital level by keeping its total capital adequacy ratio, which is a measure of a bank's capital health, at a relatively high level of 15.89 percent.

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