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Jakarta Post

Indonesian banks hope interest income will pick up in second half

  • Riska Rahman

    The Jakarta Post

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Jakarta   /   Mon, August 26, 2019   /  12:55 pm
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A Bank Jatim teller serves a customer. Indonsia's major banks suffered a decline in their net interest margin (NIM) in the first half.(Antara/Rosa Panggabean)

Indonesia’s major banks expect net interest income will pick up this year as the downward trend in the lending rate will enable them to increase the level of their net interest margin (NIM). Throughout the first half, most of Indonesia’s major banks’ NIMs fell because of a series of increases in Bank Indonesia’s bench mark rate during the six-month period. The increase in the rate led to the fall in their NIMs, the difference between net interest income and the amount of interest paid out to depositors and other funders. Bank Rakyat Indonesia (BRI) was one of the banks that felt the blow from the series of rate hikes last year. The country’s most profitable bank’s NIM dropped to 7.02 percent in the first half from 7.64 percent in the same period of 2018. “The decline was natural because we’ve adjusted our deposit rate, bu...