Banks ready to increase deposit rate

Jakarta.  Bankers estimated that liquidity will tighten up at the end of 2016 in line with a slowdown in the growth of third party funds (DPK). This condition will also increase the loan to deposit ratio (LDR) of the bank. If it continues, the bank will again raise deposit rates to attract depositors.

President Director of PT Bank Mandiri Tbk Kartika Wirjoatmodjo estimated that in the future, the increase in deposit interest will become the trend of the major banks. Although the current liquidity is sufficient, most bankers have a sense that the tightening will occur near the end of the year.

Bank Mandiri also recently raised interest rate in anticipating the liquidity tightening at the end of the year, Kartika said.

This was a strategy to preempt competitors, who will perform similar steps in absorbing liquidity, Kartika added.

As an information, based on the of Bank Indonesia (BI) on circulating money, as of September 2016 the third party funds dropped from 6.75 in 4%. While the deposit during the period of January-September 2016 rose only by 2.7%, compared to the same period in the last year that increased by 4.6%.

Meanwhile, the saving funds rose by 11.5% compared to a year ago that grew 14.4%. On the other hand, the current accounts dropped by 3.1%, whereas previously increased by 0.8%.

In general, as of September 2016 LDR in Indonesia rose from 92.25% during the same period in 2015 to 94.41%.

Kartika added that public funds are also much absorbed into government and private bonds this year.

Still restrain

Conversely, Director of Finance and Treasury Savings at BankNegara (BTN) Iman Soeko Nugroho claimed that to date the liquidity condition of BTN is still quite adequate. Because, the liquidity needs of BTN is as not much as other major banks.

Faith added that so far the maximum deposit interest of BTN is still following the maximum limit of interest set by the Deposit Insurance Agency (LPS). In fact, to date the LDR of BTN has reached 104.3%.

However, Iman is optimistic that BTN still has sufficient liquidity, so the bank does not need to raise the deposit rates. About 15% of credit funding were derived from bonds, NCD (negotiable certificate of deposit), securitization and bilateral loans. So there is no plan to raise deposit rate, Iman said.

Similarly, PT Bank Central Asia Tbk (BCA) also has no plan to raise the deposit rate. Liquidity will also depend on the repatriation funds, said the Head of Treasury of BCA Branko Windoe. To date, the LDR of BCA reached 90%.

(MUHAMMAD FARID/Translator)