BNI and Danamon Results Prove Drastically Different


JANUARY 29, 2015

Jakarta. Two major lenders in Indonesia posted drastically different financial performances last year, with one enjoying profit growth at a double-digit rate and the other seeing a decline in gains.

State-owned Bank Negara Indonesia, the country’s third-largest lender by assets, booked 19.1 percent growth in its net income in 2014 despite a relatively a difficult year, thanks largely to steady growth of interest and non-interest income.

BNI’s profit increased to Rp 10.8 trillion ($862.9 million) in 2014 from Rp 9.1 trillion a year ago. The lender’s outstanding loans was recorded at Rp 277.6 trillion as of end of 2014, rising 10.8 percent from the previous year.

The increase spurred the lender’s net interest income — income from interest charges after deducting the cost of paying depositors — to increase by 17.4 percent to Rp 22.4 trillion.

Non-interest income, from banking transaction charges, meanwhile, increased 13.5 percent to Rp 10.7 trillion.

The healthy growth highlighted “the quality of BNI’s credit performance and its ability to boost the net interest margin to 6.2 percent from 6.1 percent in 2013,” BNI president director Gatot Suwondo said.

The net interest margin is one measurement of a lenders profitability.

BNI’s gross non-performing loans fell to 1.96 percent of its total outstanding loans last year from 2.17 percent in the previous year. A decline in gross NPL means the quality of credit has improved.

Meanwhile, Bank Danamon Indonesia, the country’s sixth-largest lender by assets, saw its profit decline by 36 percent to Rp 2.6 trillion last year, a massive drop from Rp 4 trillion in 2013.

Bank Danamon chief financial officer Vera Eve Lim attributed the profit slump to a regulatory change in accounting for automotive insurers imposed by the Financial Services Authority (OJK) last year.

Discounting the regulatory change, the lender’s net income would be Rp 3.54 trillion, or 15 percent lower than 2013.

The country’s economic slowdown and a high interest-rate environment dragged down Bank Danamon’s lending growth last year, which in turn also affected the lender’s profitability, Vera said.

Bank Danamon — whose shares are mostly controlled by Asia Financial, a unit of Singapore’s Temasek — also spent Rp 300 billion on restructuring its organization last year.

The lender’s total outstanding loans grew only 3 percent to Rp 139 trillion last year, with trade financing in the lead.

Loans to small and medium enterprises declined 5 percent to Rp 20 trillion, while the lender’s automotive loans through its automotive financing unit Adira Dinamika Multi Finance only increased 3 percent to Rp 49.6 trillion.

Bank Danamon’s net interest income climbed a mere 1 percent to reach Rp 13.7 trillion last year.

Its net interest margin also softened to 8.4 percent from 9.6 percent in 2013.

Still, the figure was higher than BNI’s net interest margin, which suggests that the bank’s performance will improve this year, Vera added.