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Major RI banks see cost of funds hike amid high interest rate environment
While the country's top four lenders posted a rise in COF and a slight dip in NIM during the first quarter, a banking analyst has projected steady net growth over the year.
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A man makes a transaction at a Bank Rakyat Indonesia ATM gallery in Jakarta, in this file photo dated Jan. 31, 2013. (tempo.co/Eko Siswono Toyudho )
M
ajor Indonesian banks saw their cost of funds (COF) rise during the first quarter of this year as they strived to maintain public money on balance sheets in a high interest rate environment.
COF measures the rate banks have to pay in order to secure sufficient funds needed to sustain operations, which primarily involve lending to customers.
State-owned lender Bank Mandiri said in its quarter one earnings report that its COF had increased by 0.32 percentage points compared to the previous quarter, following a move to offer time deposits at a special rate to maintain liquidity.
Bank Rakyat Indonesia (BRI), another state-owned lender, also took a similar measure that resulted in its first-quarter COF growing by 0.62 percentage points compared to the previous quarter.
BRI cited the rising interest rate trend, preparations for the Idul Fitri holiday season and dividend payment period among the factors that led to a higher COF in March and April. However, it said the COF would stabilize over the remainder of this year.
Meanwhile, the country’s largest private lender BCA followed by raising interest rates for its time deposits in March. This marked a departure from its previous stance last year, during which it saw no need to adjust its savings and time deposit rates.
“However, time deposits only cover around 19 percent of our total third-party funds. Thus, this [rate] increase for time deposits resulted in only a hike of 0.1 percentage point to our cost of funds,” BCA CEO Jahja Setiaatmadja said during its earnings call on Thursday.
