Banking sector cut credit interest rate

JAKARTA. Credit interest rate is expected to decrease to one digit, after BI (the Central Bank) decided to cut 7 days repo rate by 25 bps to 5%.

The Head of Executive of Banking Supervision at Financial Service Authority (FSA) Nelson Tampubolon is optimistic that several credit segments will have one digit-rate by the end of 2016.  According to Nelson, credit rate for several sectors, such as banking sector has stood at one digit.

According to Kontan note, almost all of larger banks or the banks under the category of General Bank Enterprise Activity  IV (BUKU IV) have booked one digit-credit rate in number of sectors.

For an example, PT Bank Central Asia Tbk (BCA) set the corporate credit rate at 9.75% and non-Housing Ownership Credit (KPR) at 7.69%.

In general, State Owned Enterprises or SOEs’ banks have set one digit-rate.  For an example, PT Bank Mandiri Tbk, PT Bank Rakyat Indonesia, and PT Bank Negara Indonesia have set credit rate at 9.95%, 9.75%, and 9.95%, respectively.

Financial Director at Bank Rakyat Indonesia (BRI) Haru Koesmahargyo said that credit rate, mainly at the segments of SOEs’ micro and corporate business may decrease by around 25 bps following the decrease in benchmark interest rate during the fourth quarter of 2016.

BCA admitted that credit rate for small and middle enterprise still stand at two digits. However, President Director of BCA Jahja Setiaatmadja said that at the beginning of September, BCA has cut credit rate for small and medium enterprises (UKM) by 25bps to 10.25%.

PT Bank Permata Tbk is also optimistic that credit rate, mainly in corporate sector may decrease in the fourth quarter of 2016. Director of Wholesale Banking at Bank Permata Anita Siswadi said that bank has gradually declined the credit rate following the drop in cost of fund.

“In the fourth quarter of 2016, credit rate for corporate, except in mining sector will drop by 25bps”, Anita said. Recently, business in mining sector has high potential risk due to sluggish global demand.

Meanwhile, President Director of Bank OCBC NISP Parwati Surjaudaja said that in the fourth quarter of 2016 the bank will decrease the credit rate for corporate sector by 25 bps to 10.5%. “We will decline the credit rate in October. The next will depend on BI and FSA’s policies”, Parwati said.

(MUHAMMAD FARID/Translator)