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February 16, 2009

Indonesia's Niaga bank sees loan growth slowing down

The head of PT Bank CIMB Niaga said Indonesia's sixth-largest bank has not been as badly hit as its peers by the financial turmoil, but expects a sharp slowdown in loan growth in 2009 the economy slows.

Arwin Rasyid, president director of Bank CIMB Niaga, was quoted by Reuters as declining to specify how much the bank had lost as a result of the sharp drop in the rupiah and bonds in the fourth quarter of 2008 when many investors pulled out of emerging markets such as Indonesia.

"I'm very pleased to say we're not the most affected," Rasyid said when asked about losses resulting from the market turmoil.

"I'm not at liberty to say (how much was lost) but I can assure you that our situation is not like what we hear of other banks. All the banks that have forex in one way or another have losses. It's just a matter of degree," he told Reuters on the sidelines of a conference.

Rasyid said that part of the problem was that banks "were betting that the rupiah won't go beyond 10,000" per dollar.

The rupiah fell sharply in late 2008, and now trades at around 11,750 rupiah per dollar.

Media have reported that some companies have defaulted on currency contracts as a result of the rupiah's weakness.

PT Bank Danamon Tbk, Indonesia's fifth-largest bank, said on Thursday its net profit for 2008 fell 28 percent to 1.53 trillion rupiah ($130 million), due to 804 billion rupiah worth of non-recurring expenses which it said were related to "unwinding foreign exchange forward contracts and provisioning".

With the government forecasting that economic growth will slow to between 4 and 5 percent this year, from an estimated 6.2 percent in 2008, banks are warning of lower loan growth.

"On loan growth, we expect between 15-20 percent (in 2009), from 35 percent last year," Rasyid said.

Bank CIMB Niaga, formed from the merger last year of Bank Niaga and Bank Lippo, is controlled by Malaysia's CIMB Group, which in turn is controlled by holding company Bumiputra-Commerce Holdings Berhad.

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