April 29 (Bloomberg) -- PT Bank Mandiri and PT Bank Central Asia, Indonesia’s biggest lenders, said profit rose in the first quarter as low interest rates spurred demand for credit.
Bank Mandiri’s net income in the three months through March 31 rose 26.4 percent to 4.3 trillion rupiah ($442.3 million) and Bank Central Asia’s profit rose 25.5 percent to 2.9 trillion rupiah, the companies said in separate briefings in Jakarta today.
Indonesian banks are benefiting from a record low interest rate that has boosted spending in Southeast Asia’s biggest economy. Household consumption made up about 55 percent of gross domestic product in the fourth quarter, as demand for properties and vehicle loans rose.
“This year we are growing carefully due to global economic conditions, pressure on inflation and the rupiah, and the current account deficit,” Mandiri President Director Budi Gunadi Sadikin said at a press briefing to announce the results. Micro lending helped boost the bank’s loan growth in the first quarter, he said.
Bank Mandiri posted a 24.2 percent increase in first-quarter net interest income to 7.5 trillion rupiah, the Jakarta-based company said. Lending gained 19.7 percent to 391.6 trillion rupiah, it said.
Bank Central Asia’s net interest income rose 25.6 percent to 6.03 trillion rupiah, the company said. Lending rose 26.7 percent to 265 trillion rupiah as low interest rates increased demand for mortgage and auto financing, President Director Jahja Setiaatmadja said. The company expects 20 percent loan growth this year, he said.
The central bank has kept its benchmark interest rate at 5.75 percent for 14 straight meetings to spur economic growth as a slowdown in the global economy is hurting exports.
Bank Central Asia’s mortgage lending jumped 49 percent last year. Still, growth may slow to 20 percent to 30 percent this year as the property market consolidates, Setiaatmadja said on April 4. The bank plans to focus on mortgages in big cities, including Jakarta and Surabaya where demand for repossessed houses in a downturn is probably to be high, he has said.
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