According to an OJK statement circulated in April, lenders whose net interest margin (NIM) is less than 4.5 percent because they are providing lower cost of funds for clients will be provided with a certain easing when opening new branches.

“We probably would not take the incentive. We will retain our NIM higher than 6 percent, as it is a comfortable level for our business,” BCA president director Jahja Setiaatmadja said during a press conference in Jakarta on Wednesday.

The bank actually has an increasing NIM at 7 percent as of June 2016, compared to 6.6 percent in the same period last year. According to Jahja, the high margin is still needed to remain competitive in the industry.

“The incentive is more suitable for banks that are currently in an aggressive stance for branch expansion. We are currently not expanding as much as before,” he said, adding that the bank has halved its expansion pace by opening only 40 to 50 small branches this year.

Jahja said he was not too optimistic about the economy this year, as the year-to-date loan growth retreated 0.2 percent. The loan to deposit ratio stood at 77.9 percent with non-performing loans increasing to 1.4 percent, from 0.7 percent in June 2015 because of the sluggish economy. (ags)

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