PT Bank Rakyat Indonesia posted a net profit of Rp 3.49 trillion ($345.5 million) during the first half of the year, an increase of 23.9 percent over the year-earlier period, the company said on Monday.
BRI president director Sofyan Bashir said the improved profit resulted from the bank’s commitment to small- and medium-sized enterprises, which accounted for 81.7 percent of the bank’s total loan portfolio. He did not offer additional figures for SME loans.
“As of the end of the second quarter our portfolio for the sector totaled Rp 150.84 trillion, out of total outstanding loans of Rp 184.6 trillion,” Sofyan said. The bank’s total loans grew 35.8 percent.
He added that the SME sector had been resilient during the global downturn, and provided a high profit margin for lenders.
The bank also posted a 14.7 percent increase in interest income during the first half, to Rp 10.93 trillion, despite rising deposit rates.
BRI also said it would likely delay its plan to issue subordinated debt worth Rp 3 trillion in the second half until next year on expectations that interest rates would continue to fall.
Sofyan said the bank would wait until the agreement by 14 of the country’s major banks to lower deposit rates takes full effect later this year. The measure is expected to drive lower yields in government bonds, the benchmark for corporate debt, as well as encouraging lending.
“Currently deposit rates are already 8 percent and the coupon for government bonds is at 10 percent. If [the coupon] goes down to 9 percent or 8.5 percent we will consider [issuing the debt],” Sofyan said.
Subordinated debt is long-term debt in which the holder has a lower-priority claim to the issuing company’s assets in case of default, resulting in a higher interest rate.