REPUBLIKA.CO.ID, JAKARTA - Foreign banks suffered negative profit growth during first half of 2013. Based on Indonesian Banking Statistics, foreign banks recorded profit of 2.25 trillion IDR or negative growth of -37 percent year on year (yoy) or compared to the last year when their profit grew 31 percent.

The decline was caused by the reduction of operating profit driven by lower fee based income. Foreign banks has recorded operating profit of 3.2 trillion IDR or decreased 37 percent yoy and non interest operating income also falls to 14.6 trillion IDR or slightly increase 0.04 percent.

"Decline in profit is due to higher operating costs outside interest expense and the increasing loss of foreign exchange as well as derivative transactions. It is also influenced by IDR weakening," Economist of PT Bank Internasional Indonesia, Juniman said on Thursday.

Juniman said, foreign banks must increase its loan to boost its profit in Indonesia through interest income could also increase. Yet, he admitted it wasn't easy because interest rates tend to rise. Another option to increase their profit is Another step, foreign banks should increase its fee based income and its efficiency in order to increase profit. 

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