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IMB Niaga, Indonesia’s fifth-biggest lender, has acknowledged that its business was affected by the minimum down payment limit set by Bank Indonesia (BI), saying that it has seen a significant decrease in housing loans since the policy was implemented by the central bank in July.

Since BI increased the minimum loan-to-value (LTV) ratio for housing loans from 80 percent to 70 percent, the bank has channeled only Rp 200 billion (US$20.86 million) in housing loans every month, approximately 20 percent less than its average monthly figure, according to CIMB Niaga’s head of consumer lending, Tony Tardjo.

“Despite the decrease, we fully comply with the LTV rule. We support the rule because it increases the healthiness of credit portfolio of domestic banks,” he said on Wednesday.

Although part of the decrease was due to fewer housing sales from July to September due to Ramadhan, the impact of the LTV policy was actually “quite significant” to CIMB Niaga.

Indonesians held back from purchasing new homes due to the high level of minimum down payment,
he added.

BI increased the minimum down payment to put brake on booming consumer loans, specifically housing and automotive loans that in 2011 grew by more than 32 percent, exceeding the overall 24.9 percent loan growth. The central bank argues that the policy is necessary to avoid a bubble in the property sector.

CIMB Niaga felt the impact of the policy because housing loans are big share (almost half) of their consumer credit portfolio.

As of June, total outstanding of housing loans in CIMB Niaga topped Rp 19.12 trillion, or around 48 percent of the total consumer loans. The figure is up 15 percent compared to the previous year.

The lender, meanwhile, expects housing loans outstanding to exceed Rp 21 trillion by the end of the year.

“The target [of Rp 21 trillion] is actually lower than our initial one. We had to adjust the target due to the LTV policy,” Tony said, without disclosing the previous target.

Among CIMB Niaga’s strategies to meet the target are improving its services to the customers — such as expediting the housing loans request process — as well as cooperating with property developers to access new customers.

CIMB Niaga on Wednesday signed an agreement with Ciputra Adigraha, a subsidiary of major property developer Ciputra Property, which will give the lender access to prospective buyers of Raffles Residences Jakarta, in Jl. Prof. Dr. Satrio in South Jakarta.

By signing the agreement, the lender will have the opportunity to offer its niche product, the “X-tra Luxury” housing loan, which has minimum limit of Rp 5 billion and an interest rate of 10 percent annually.

“We hope that, by signing agreements with property developers, we will get a boost in our housing loans that will help us to meet our yearly target,” said Tony. (sat)