Several big state-controlled banks in Indonesia posted double-digit profit growth in the third quarter of 2017, extending the positive corporate performance that was posted by these banks in the preceding quarters. This performance comes on the back of sliding reserves in line with rising credit growth, an improvement in the quality of banks' loans and lower non-performing loan (NPL) ratios.
For example, state-controlled Bank Mandiri saw a 25.4 percent (y/y) jump in net profit to IDR 15.1 trillion (approx. USD $1.1 billion) up to Q3-2017 (compared to IDR 12.01 trillion reported in the same period one year earlier).
Kartika Wirjoatmodjo, President Director of Bank Mandiri, attributed the strong profit growth to the bank's lower NPL ratio, a 9.8 percent (y/y) increase in loans, as well as cost efficiencies. Bank Mandiri's NPL ratio (gross) now stands at 3.75 percent, down from 3.81 percent in September 2016. As a result its assets grew 10.6 percent to IDR 1,078.7 trillion (approx. USD $80 billion). The improvement in quality of assets also led to a lower loan loss provision.
Meanwhile, Bank Negara Indonesia (BNI) reported a 31.6 percent (y/y) jump in net income to IDR 10.2 trillion (approx. USD $753 million) up to Q3-2017 on the back of sharply improving income from the corporate clients segment.
Lastly, Bank Tabungan Negara (BTN) posted a 24 percent (y/y) increase in net income to IDR 2 trillion (approx. USD $148 million) in the January-September 2017 period. Maryono, President Director of BTN, said these positive results came on the back of several innovation and transformation strategies. Moreover, Indonesian authorities (government and the central bank) have been actively stimulating growth, especially in the property and banking sectors.
Another big state-controlled bank that is listed on the Indonesia Stock Exchange, Bank Rakyat Indonesia (BRI), is yet to release its Q3 corporate earnings. However, it had indicated earlier that it eyes double-digit profit growth.
Stock Performance Comparison:*
BMRI = Bank Mandiri
BBNI = Bank Negara Indonesia
BBTN = Bank Tabungan Negara
BBRI = Bank Rakyat Indonesia
* normalized stocks, 14 September 2017 = 100