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Jakarta Post

CIMB Niaga scrambles for mortgage growth in sluggish property market

  • News Desk

    The Jakarta Post

Jakarta   /   Fri, February 22, 2019   /   11:13 pm
CIMB Niaga scrambles for mortgage growth in sluggish property market A man conducts a transaction at a CIMB Niaga ATM. (Antara/Rosa Panggabean)

Private lender CIMB Niaga, one of Indonesia’s leading mortgage lenders, remains optimistic about its housing loan growth despite the slowdown in the property market, thanks to several special offers.

The bank has set sights on the country’s growing millennial generation with its latest mortgage loan product called KPR Xtra Bisa, which offers down payments starting from 5 percent and a three-year fixed rate of 5.5 percent with a tenor of up to 25 years.

The millennial group ranges from 21 to 35 years of age and a particularly productive part of the population.

According to the bank, there is a positive trend in house purchases among millennials, based on its data of mortgages issued in 2018.

“We offer promotions and discounts to help alleviate millennials’ financial burden in purchasing houses,” CIMB Niaga head of retail products Budiman Tanjung said recently on the sidelines of the bank’s product exhibition in South Tangerang, Banten.

The bank also joined hands this month with online marketplace PROJEK, which provides a platform for developers to promote their properties. Potential homebuyers can access them through a digital app with various mortgage schemes from the bank.

“We see quite big potential from this collaboration, because the prices of the houses offered on the app are lower than the ones offered directly by developers,” Budiman said.

He added that interest rates charged for mortgages in the app would vary according to the tenor and type of house, among other things. A three-year fixed rate would normally range from 6.75 to 7 percent, he said.

Experts have noted that Indonesia’s property market was sluggish right now due to oversupply in recent years and stagnant purchasing power. Bank Indonesia data show that residential property sales declined by 14 percent in the third quarter of 2018.

At the same occasion, CIMB Niaga president director Tigor M. Siahaan expressed hope that the bank’s mortgage expo, which was held from Feb. 16 to 17, would help grow its customer base.

The bank, part of Malaysia’s financial services group CIMB, is targeting double-digit growth in the number of customers this year.

“We have at least 8 million customers at the moment and we expect to see double-digit growth this year, which includes customers in all sectors, such as consumer, mobile phone-based accounts, non-retail and non-corporate and so on,” he said.

In the first three quarters of 2018, CIMB Niaga booked Rp 48.5 trillion (US$3.44 billion) in consumer loans, which contributed 26 percent to its overall lending portfolio of Rp 182.8 trillion. The bank’s mortgage loans are part of consumer lending.

While it booked only 2.2 percent year-on-year (yoy) growth in overall loans in the first nine months of 2018, the bank posted an 18 percent yoy rise in net profit to Rp 2.6 trillion over the same period.

It also maintained its place as Indonesia’s second-biggest private lender, with total assets reaching Rp 260.6 trillion, up 3.4 percent yoy. (ars)