The country’s largest private lender PT Bank Central Asia (BCA) says that it may see lower consumer lending, particularly in mortgage and vehicle lending, as an impact of the implementation of minimum down payments starting last month.

BCA president director Jahja Setiaatmadja estimates that the fall in the bank’s mortgage and vehicle lending will be lower than the 10 to 15 percent drop projected for the country’s banking and financing industry.

“Each bank has different lending trends because they have their different market segments. The industry may see a 10 to 15 percent decline in mortgage and vehicle lending. BCA also anticipates [lending] to go down but it is estimated to be below 10 percent,” Jahja said on Wednesday.

The central bank, Bank Indonesia, implemented a new regulation last month requiring minimum down payments of 25 percent for motorcycle loans from banks, 30 percent for auto loans, 20 percent for commercial vehicles and 30 percent for house lending.

The regulation aims to slow the rapid growth of mortgage and vehicle lending amid the country’s middle class boom. Banks’ total housing and automotive loans grew an average of 32 percent last year, higher than the overall 24.9 percent loan growth.

Jahja said that BCA had implemented minimum down payment requirements of about 20 percent so that its customers would have an easier time adjusting to the new regulation.

BCA director Henry Koenaifi said that the decline of mortgage and vehicle credits was particularly important because its customers – mainly the middle class — would have to postpone their desires to purchase houses or cars until they had enough money for a down payment.

“However, middle-class market is usually more stable. They usually have saved about 40 to 50 percent of the purchase price before decided to buy a house,” Henry said.

BCA reported 39.2 percent growth in its credit portfolio to Rp 209.2 trillion (US$22.384) in the first quarter of the year. The growth was mainly supported by a 43.4 percent increase in corporate lending to Rp 74.8 trillion. The bank’s loans to commercial customers as well as small and medium enterprises grew 36.3 to Rp 81.1 trillion.

Meanwhile, consumer loans grew by 37.8 percent to Rp 53.3 trillion during the January-March period. BCA’s consumer loans were supported by 56.7 percent growth in mortgages to Rp 30.6 trillion, while automotive loans increased 24.8 percent to Rp 17.9 trillion. BCA is hoping to see around a 20 percent increase in overall credits this year.

According to figures from the central bank, national mortgage lending grew 4.39 percent to Rp 95.04 trillion between January and April, compared to Rp 91.07 trillion in the same period last year. Meanwhile, loans for apartments grew 10.75 percent to Rp 2.58 trillion in the first four months of the year versus Rp 2.3 trillion in the same period last year.

Lending for vehicles dropped 13.3 percent to Rp 12.9 trillion during the January-April period compared to Rp 14.88 trillion in the same period last year.

Although the new down payment rule went into effect on June 15, creditors were already adjusting to the new requirement as early as May, which saw motorcycle sales plunge 13.5 percent to 611,251 units compared to the same period last year. The sales record was the lowest level in 16 months according to the Indonesian Motorcycle Industry Association (AISI).

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