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Indonesian banks boost bad loan provisions, fret about mining sector impact

Published 2015-08-05, 03:49 a/m
Indonesian banks boost bad loan provisions, fret about mining sector impact
BBNI
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BMRI
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By Eveline Danubrata and Patturaja Murugaboopathy
JAKARTA/BENGALURU, Aug 5 (Reuters) - Several Indonesian big
banks have sharply hiked bad loan provisions, helping push
combined first-half profits to their first decline in almost a
decade, as they fret about the impact of a troubled mining
sector and weaker commodity prices on the economy.
State-owned PT Bank Negara Indonesia Tbk BBNI.JK nearly
tripled its provisions to 6 trillion rupiah ($445 million) in
the six months to end-June, while net profit fell 51 percent. At
PT Bank Mandiri Tbk BMRI.JK , the nation's biggest lender by
assets, provisions jumped 41 percent to 4 trillion rupiah while
net profit growth slowed to 3.5 percent from 16 percent in the
same period a year earlier.
"The economy may not recover quickly, so we need to have a
bigger piggy bank," Budi Gunadi Sadikin, Mandiri's president
director, told reporters after its earnings last week. "That's
why we don't want as much profit - it's better to have
reserves." He noted the lender has significant exposure to the
mining sector.
Combined first-half profits at Indonesia's 10 biggest banks
fell 8.9 percent to 37.6 trillion rupiah ($2.8 billion) from a
year earlier, the first fall in nine years, according to Thomson
Reuters data. Data on Wednesday also showed growth for Southeast
Asia's largest economy was the slowest since 2009 in the second
quarter, with commodity exports weak and the government unable
to push through badly needed infrastructure projects.

Teguh Hartanto, analyst at Bahana Securities, said he
expects the banking sector's non-performing loan ratio to
increase to 2.7 percent-2.8 percent this year from 2.4 percent
now.
($1 = 13,483.00 rupiah)

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