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omestic lenders will have to put more of an effort into raising third-party funds (DPK) within the next five years as the source of funds gets more limited, Citibank'€™s top executive has said.

Tigor M. Siahaan, chief country officer of Citibank N.A., Indonesia, said Indonesian banks had paid too much attention to the accumulation of assets but often overlooked another crucial segment of the banking business; that of funding.

'€œThe question has always been, '€˜How do you grow your assets or loans?'€™ I think the game for banks in the next five to 10 years is funding. The funding game has got to be much more important than the asset game,'€ he said.

He attributed the importance of funding to the latest growth in loans, which has been significantly higher than that of deposits over the past decade.

Banking statistics jointly published by the Financial Services Authority (OJK) and Bank Indonesia (BI) show that commercial banks posted a 21.6 percent growth year-on-year in lending in 2013, while they only booked a 13.6 percent rise in DPK during the same period.

The statistics reveal a similar trend in previous years as the loan growth rate was 4 to 7 percentage points higher than the rate of the DPK.

In total, Indonesian banks saw their outstanding loans jump more than sevenfold to Rp 3.29 quadrillion (US$281.03 billion) from 2003 to 2013, but their DPK portfolio only increased four times to Rp 3.66 quadrillion in the same period.

This development, Tigor said, resulted in a significant increase in the loan-to-deposit ratio (LDR) and led to a tight liquidity situation, with the LDR standing at 89.7 percent in 2013 from 43.5 percent in 2003.

The LDR has continued to creep up this year and stood at 90.2 percent by the end of June 2014.

'€œGiven the current LDR, you can'€™t really grow your assets any more than you can grow your deposits unless you inject more capital, but by and large, you need deposits to grow your assets and we will see tighter competition to secure deposits in the future,'€ he said.

Citibank'€™s LDR itself amounted to 87.6 percent in the first half of 2014, well below the 92 percent benchmark set by regulators.

According to its June financial report, the lender had as much as Rp 38.29 trillion in outstanding loans and Rp 43.72 trillion in DPK. Large corporations accounted for almost all of its loans, while demand deposits accounted to more than half its DPK portfolio.

Meanwhile, Tigor said that Citibank '€” now the third-largest foreign bank by assets in Indonesia '€” would maximize both its consumer and institutional business segments to cope with the funding challenges.