BCA president director Jahja Setiaatmadja said on Thursday that collecting third-party funds (DPK) would be difficult in the future, now that the tax amnesty had ended.

BCA — the largest private lender by assets — was “flushed” with funds as it managed Rp 11 trillion (US$825.33 million) in repatriated money from the tax amnesty, which ran from July 2016 to March 2017.

By the end of March, its loan-to-deposit ratio (LDR) stood at 76.4 percent, meaning it only channeled 76.4 percent of its total deposits as loan, an indication of ample funds from savings, current account and time deposits.

The LDR had eased from 78 percent before the tax amnesty began.

Jahja said there would be no easy funding source anymore and the bank might have to compete against the government to secure funds for loans because the government’s massive infrastructure projects would suck up money from the financial market as well.

The latest banking statistics from the Financial Services Authority (OJK) show the banking industry’s overall LDR had reached 89.1 percent in February, but still below the maximum requirement of 92 percent.

BRI finance and treasury director Haru Koesmahargyo said lower primary reserve requirement (GWM) could be a solution for the tight liquidity issue in the future.

Bank Indonesia (BI) requires lenders to maintain a 6.5 percent GWM ratio, meaning they have to keep 6.5 percent of their third-party funds at the central bank each day.

“The faster way [to ease the tight liquidity] is to lower the GWM, so that some reserved funds can return to banks and be used for [credit] expansions,” Haru said.

State-owned BRI already surpassed the LDR benchmark, as its LDR hovered at 93.1 percent as of March.

However, banks are allowed to exceed the 92 percent mark if they have additional funding sources from medium-term notes, floating-rate notes and bonds. By then, the benchmark is pushed to 94 percent under the “loan-to-funding ratio” or LFR scheme.

Meanwhile, BCA and BRI announced their first-quarter results on Thursday that saw both banks jack up their loan portfolios.

BCA pushed its outstanding loans to Rp 409 trillion in the January to March period, an increase of 9.4 percent year-on-year (yoy).

The highest increase was recorded in the corporate loan segment with an almost 20 percent annual rise and it made up for 37.3 percent of the total loans.

Its third-party funds expanded by 13.8 percent yoy to Rp 535.1 trillion and its net profit surged by 10.7 percent to Rp 5 trillion.

BRI posted an even higher growth rate than BCA as its outstanding loans climbed more than 16 percent yoy to Rp 653.09 trillion in the first quarter.

Loans to fellow state-owned enterprises (SOEs) jumped the highest by almost 23 percent yoy to Rp 96.4 trillion.

Its main segment, micro loans, only grew 13.9 percent to Rp 216.1 trillion.

“We are still focusing on MSME [micro, small and medium enterprises] loans, even though there is a dilemma now because the government wants us to give a single-digit interest rate,” BRI president director Suprajarto said.

“This segment requires a high collection cost with a lot of people [employed], but we will try to be efficient with the help of technology.”

In terms of deposits, BRI ended the first quarter with Rp 701.17 trillion, up 11 percent annually. It also reaped net profit of Rp 6.47 trillion, rising slightly by 5.5 percent.

Popular

To my horror, it’s just a movie!

RI, Australia strengthen partnership on taxing crypto assets

Pentagon chief congratulates Prabowo on being elected President