ublicly listed lender PermataBank is seeking to boost its third party funds with cheaper sources, such as current and savings accounts, instead of time deposits, in an effort to restructure its business.
PermataBank corporate planning head Harry Iman Subekti said from January to September the bank had managed to reduce time deposits by 18 percent year-on-year (yoy) to 73.9 trillion (US$5.6 billion), while seeing current and savings accounts increase by 1.81 percent yoy to Rp 56.1 trillion.
Time deposit-dominated third-party funds have made the bank, owned equally by diversified conglomerate Astra International and UK-based lender Standard Chartered Bank, less flexible in cutting interest rates and have reduced its competitiveness.
"To increase the size of savings accounts, we will utilize Astra's network, expand our payroll business to more companies in the group," Harry told The Jakarta Post on Friday.
The strategy, Harry added, was expected to help the bank's efforts to restructure its non-performing loans (NPL), the ratio of which soared to 4.9 percent in the third quarter of 2016. The figure increased by 240 basis points (bps) compared to 2.5 percent in the same period last year.
"PermataBank played in the medium corporate segment which is more vulnerable in crisis; we are trying to increase the small corporate and consumer segments right now," he said.
Vice president director Julian Fong said the rising bad loans had reduced the bank's profits after tax due to a higher provision. PermataBank increased its provision for losses by 175 percent yoy in the January-September period, while its operating profit increased by only 4 percent yoy. The bank recorded Rp 1.23 billion in net losses during the period. (hwa)
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