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NEW UPDATES Asean Affairs   5 February  2016  

 BRI cautious about risks amid lower profit growth

State-owned Bank Rakyat Indonesia (BRI) has seen the impact of the country’s economic downturn as its annual profits decreased last year despite posting a double-digit loan growth.

The bank posted Rp 25.2 trillion (US$1.83 billion) in net profits as of Dec. 31 last year, a slight 4.25 percent increase from the Rp 21.8 trillion taken in 2014.

The net-profit growth in 2015 was lower compared to the 14.4 percent year-on-year (yoy) increase booked in 2014.

BRI vice president director Sunarso said the lower net-profit growth in 2015 was caused by pressures in the domestic economy and banking industry in the first quarter last year, such as tight liquidity and an increase in interest rates.

However, Sunarso said the bank was able to post a loan growth of 13.9 percent yoy to Rp 558.4 trillion as of 2015, which was higher than the average 10 percent in the industry.

“To increase loans was not easy amid the recent challenges in the economy, but we were able to grow at a rate above the industry,” he said at a press conference on Wednesday.

Loan growth in 2015 was mainly supported by 31.5 percent yoy increase in non-State-Owned Enterprise (SOE) corporate loans, followed by 16.8 percent yoy growth in the micro lending segment.

The lower net profit growth was also caused by a rising loan-loss provision as its gross non-performing loan (NPL) increased to 2.02 percent in 2015, from 1.69 percent a year earlier, due to weak economic growth.

BRI finance director Haru Koesmahargyo said the bank posted a 60 percent increase in loan-loss provision to Rp 8 trillion in 2015, from Rp 5 trillion in 2014, with a coverage ratio reaching 151.1 percent or above the normal 100 percent.

The bank will remain conservative as it predicts that its gross NPL will stand at around 2.1 percent to 2.4 percent this year due to lingering downturn effects in the economy.

“We predict that our loan-loss provision will still rise this year as there is remaining risk in the economy. However, the provision growth will be lower compared to last year,” Haru said.

As economic challenges linger, BRI president director Asmawi Syam said the bank would stay cautious this year as it was expecting that its loans would grow between 13 percent and 15 percent and net profits would increase between 3 percent and 5 percent, which remained within the range achieved in 2015.

As an effort to achieve the profit target, BRI vice president Sunarso said the bank expected that it could increase its fee-based income portion to at least 10 percent of total income, from the current 7.6 percent.

“We want to reach Rp 11 trillion in fee-based income this year, from the current figure of around Rp 7.7 trillion to Rp 7.8 trillion. We have set a strategy to increase transaction banking that will be positive for our fee-based income,” he said.

BRI also posted a lower third-party funds growth of 7.06 percent to Rp 642.7 trillion in 2015, which was a far cry from the 23.4 percent yoy increase from 2013 to 2014.

Haru said the bank would increase its low-cost funds portion this year to 60 percent of the total third-party funds, from 53.6 percent in 2015 as the bank managed to decrease the cost of funds last year.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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