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The country’s banks are determined to rake in fat profits from nonproductive consumer loans and credit-card debt rather than lending to businesses that can grow the economy and cut unemployment, or at least that would appear to be the message from the latest central bank data on banking sector profits.

According to figures posted on Bank Indonesia’s Web site late on Thursday, the cumulative profits of domestic lenders as of the end of April had soared 32 percent to Rp 15.7 trillion ($1.55 billion) from the year-earlier period, when the figure was Rp 11.9 trillion.

Analysts cautioned that while profits might be good news for bankers, they were not good news for the real sector because profits meant lenders were not lowering their rates, preferring instead to maintain high margins on the back of the public’s insatiable appetite for credit.

According to Henry Pranoto, a banking analyst at Indo Premier Securities, the banks continued to have little appetite for lending to the corporate sector due to high-risk perceptions, preferring instead to focus on the consumer-finance sector, which offers higher returns and lower risk.

“It also demonstrates that the banks are lowering their deposit rates faster than their lending rates,” he said.

“Besides, because the banks basically operate an oligopoly, it shows that collectively they are not overly confident about the economy,” he added.

His comments are borne out by Bank Indonesia’s April profitability data showing total outstanding working capital loans to businesses amounted to Rp 659 trillion, down from Rp 684 trillion at the end of 2008.

By contrast, consumer loans had increased to Rp 377 trillion from Rp 367 trillion at the end of last year.

Sofyan Wanandi, the chairman of the Indonesia Employers Association (Apindo), roundly criticized what he termed the banks’ “stubbornness” in maintain high rates, and the seemingly contradictory reasons they advanced for this. “We are tired of hoping,” Sofyan said. “The banks are only interested in benefiting from high profit margins.”

Bank Indonesia acknowledged at its monthly board meeting on June 3 that the country’s lenders had responded to the 250 basis point cut in BI’s key rate between early December and June by decreasing deposit rates by 138 basis points, but lending rates by only 31 basis points.

According to Infobank magazine, 60 percent of the domestic market is dominated by six major banks, which set the interest-rate trends for the entire industry.

However, Asti Pohan, a banking analyst at BNI Securities, said that the banks’ increasing profitability showed that the domestic banking sector remained sound despite the global crisis.

She also said the higher profits might be due to lower-than-expected provisions for nonperforming loans after the economy turned out to be more resilient than thought.

As of the end of April, the gross NPL ratio in the domestic banking sector stood at 4.06 percent, up from 3.93 percent the previous month. Bank Indonesia forecasts that the average NPL ratio for the entire industry will stand at about 5 percent for the full year.