It was a banner year for banks in Indonesia. Year-end data from the country’s central bank, released today, shows that lenders made Rp57.3trn (US$6.4bn) in 2010, nearly 30% higher than the year before and almost double the result five years ago.
Bank loans in Indonesia grew by 23% last year, and yet the system’s overall non-performing loan ratio ended the year at 2.6%, down from 3.3% the year before. Listed Indonesian banks enjoy the highest price-to-book ratio among their peers in Asia, driven by region-topping levels of profitability. Banks in the country are so profitable, in fact, that the central bank urged them not to pass on a recent interest rate hike, given that banks’ lending margins, in the words of the economic minister, are already “too high”.