BCA, Mandiri post strong Q2 profit

* Mandiri Q2 net up 23 pct, revises up 2011 loan growth

* BCA Q2 net up 41 pct on commercial, consumer loans

Leading Indonesian banks, Bank Mandiri and Bank Central Asia , posted strong second-quarter net profit growth on Thursday, reflecting buoyant domestic demand for loans in Southeast Asia's biggest economy. 

BCA, the largest by market value and No. 3 lender, saw a 41 percent jump in profit from a year ago, while the largest lender Mandiri said profit rose by 23 percent, leaving them both on track to meet analysts' expectations for full-year growth. 

Investors have poured into the stocks of both banks and Indonesia generally this year, as they seek exposure to an economy belying a global slowdown by growing at over 6 percent and driven by consumption from an emerging middle class. 

"As long as Indonesia's economy is growing strongly, companies that provide consumer services will do well. And Indonesia's economy still looks good, so it will be good for banks going forward," said Eric Sugandi, an economist at Standard Chartered in Jakarta. 

Mandiri's CEO Zulkifli Zaini said the firm has slightly revised up its loan growth outlook to 21-23 percent for this year, after posting 27 percent credit growth in the first half.

BCA, controlled by the nation's wealthiest business empire the Djarum Group, plans to expand its reach into the mortgage and securities business as it sees loan growth in housing could rise by more than 35 percent this year, to outpace overall loan growth of about 20 percent. 

"What drove loan growth in the second quarter was commercial and consumers," said BCA's CEO Jahja Setiaatmadja.

Investor bullishness on the Indonesian consumer was also underlined by a 26 percent rise in second-quarter profit for top car retailer Astra International on Thursday, though higher costs weighed down profits at Indocement despite its strong cement sales. 

Inflation has eased in recent months but is expected to pick up again from August, and July saw two strikes over higher pay -- at miner Freeport and flag carrier Garuda -- signalling the country's competitive advantage of having among the cheapest labour costs in the region may fade. 

HEADING OVERSEAS

Mandiri plans to expand its reach into China and Malaysia as it aims to be among the top five biggest banks in Southeast Asia by 2015. In Indonesia it is pushing into the fast-growing microfinance sector to compete with Bank Danamon. 

 

The firm's second-quarter net profit was 2.5 trillion rupiah ($294.6 million), compared with 2.04 trillion rupiah in the same period a year earlier, according to a Reuters calculation based on the lender's published first-quarter and first-half results. 

Analysts forecast Mandiri's 2011 net profit will rise by 26 percent to 11.64 trillion rupiah, according to Thomson Reuters I/B/E/S. 

BCA's second-quarter net profit was 2.78 trillion rupiah ($327.5 million), compared with 1.97 trillion rupiah in the same period a year earlier, according to a Reuters calculation based on the lender's published first half results. Its net interest income rose 37 percent in the first half versus 2010. 

Analysts' forecast BCA's 2011 net profit will rise by 13 percent to 9.58 trillion rupiah, according to Thomson Reuters I/B/E/S. 

The strong outlook has drawn investor interest in buying stakes in local lenders, though existing foreign players are now concerned by the possibility of limits on majority ownership, while valuations are high.

BCA trades at 5.7 times price-to-book and Mandiri at 3.3 times, versus 1.3 times for regional leader DBS Group , according to data from Thomson Reuters Starmine.

Shares in both lenders slipped ahead of the results on Thursday amid a regional sell-off as worries mount over the potential for a U.S. debt default, though both have outperformed the Jakarta index so far this year. 

Mandiri shares have gained 24 percent this year and BCA has climbed 28 percent, versus the index's 11 percent rise. Indonesia's stock market is the region's best performer and hit a fresh record on Wednesday. ($1 = 8487.5 Rupiah). Source: Reuters