CIMB Niaga Profit Quadruples Despite Weakened Lending
Jakarta. CIMB Niaga, Indonesia's fifth-largest lender by assets, managed to increase its net income by more than fourfold in the first half of this year compared to the corresponding period last year by cutting interests and costs, which they had done to try to boost lending amid a drop in loan demand.
The lender, a local unit of Malaysia's CIMB, booked a Rp 736 billion ($56 million) profit in the period ending in June, up 318 percent from Rp 176 billion a year earlier.
CIMB Niaga's net interest income — or income from lending money to customers after deducting the costs of paying depositors — increased 4.8 percent to Rp 5.81 trillion, while fee-based income was up 24 percent to Rp 1.46 trillion as of the end of June, compared to the same period last year.
"The increase in net interest income was due to dropping interest costs while the increase in fee-based income came in line with progress in our treasury and capital market business," said CIMB Niaga president director Tigor M. Siahaan in a recent statement.
Total outstanding loans dropped 3 percent to Rp 175 trillion from Rp 181 trillion at the bank, as the lender saw loan demand declining in the manufacturing, agriculture and mining sectors.
The lender's gross non-performing loans (NPL) ratio — measuring the level of bad loans in a bank — decreased to 3.9 percent from 4.2 percent previously. As a result, losses on the bad loans dropped 15 percent to Rp 2.3 trillion from Rp 2.8 trillion.
"We've seen a gradual improvement on the amount of bad loans," Tigor said.
CIMB Niaga's total assets were valued at Rp 239 trillion by the end of June, placing it behind state-controlled Bank Mandiri, Bank Rakyat Indonesia, Bank Central Asia and Bank Negara Indonesia in terms of asset size.
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