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FINANCE

State-Owned Banks See High Profits, Despite Shrinking Lending

The large increase in the net profit of state-owned banks in 2017 was mostly supported by declining reserve costs, despite sluggish growth of lending as their main business.

Bank BNI

| Katadata | Arief Kamaludin

Two out of three state-owned banks recorded net profit above 20 percent last year, mostly supported by declining reserve costs rather than interest income and bank operations. The slowdown of loan growth in 2017 indicates financial intermediation did not function optimally.

Bank Mandiri posted a large net profit growth of 49.5 percent to Rp 20.64 trillion in. Bank Negara Indonesia’s (BNI) net profit rose 20.1 percent to Rp 13.62 trillion. Both banks exceeded the banking industry’s average profit growth of 16.5 percent.

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