BTN finance director Nixon Napitupulu said in Jakarta on Wednesday that, under the digital transformation, the bank would further develop its digital platforms to reduce operating costs and expand its reach.

In addition, the bank would seek cheaper funding sources to finance its mortgage loans. “We will focus on boosting savings while focusing on retail time deposits,” he said during a press briefing after an extraordinary general shareholders’ meeting in Jakarta, which officially appointed former Pertamina finance director Pahala Mansury and three other people to the board of directors.

In addition to Pahala, who was the president director of national flag carrier Garuda Indonesia before working for Pertamina, the shareholders appointed former Corruption Eradication Commission (KPK) commissioner Chandra Hamzah as the bank’s chief commissioner.

Nixon said he was confident that the strategy could boost the bank’s liquidity through new innovation for savings accounts that could provide cheaper, alternative funding sources. The bank would also launch a new program to boost time deposit accounts from retail customers next year, as currently, Nixon said, most of its time deposits came from institutional customers.

“We’re reducing our time deposit structure to retail from institutional, because honestly, time deposits for institutional customers are higher by 1 percentage point than retail in total,” he said, expressing hope that the appointment of former Bank Mandiri senior vice president Jasmin as BTN’s distribution and retail funding director would support the transformation.

Andi Nirwoto, BTN’s newly appointed director of operations, IT and digital banking, said during the same event that the bank would focus on developing its digital banking platform to lure more customers to conduct transactions through the bank.

“Most of our customers come to us to apply for mortgage loans, not for other banking transactions. That’s why we need to create more innovation to lure more retail customers,” he said.

To develop digital banking, Nixon said the company would double its capital expenditure for IT to Rp 500 billion (US$35.48 million).

In line with the strategy, the company will also gradually reduce its exposure to wholesale funding, such as bonds and bilateral loans.

Nixon said he hoped these efforts would help the lender pool more cheap funds from retail customers and reduce its cost of funds to below 6 percent in 2020. The company’s cost of funds sat at 6.05 percent, which was considered high compared to other banks in the country.

The lower cost of funds, coupled with Bank Indonesia’s recent loosening of its reserve requirement (GWM), he continued, could boost the company’s liquidity and reduce its loan-to-deposit ratio, which sat at 112.36 percent as of September, well above the banking industry’s average of 94.34 percent.

BI recently loosened its GWM requirement by 50 basis points to 5.5 percent for conventional banks and 4 percent for sharia-compliant banks. The loosening will take effect on Jan. 2.

“The recent loosening of the GWM requirement by 50 basis points can give us an additional Rp 1.25 trillion in liquidity,” he said.

Other than working on increasing liquidity, the company is also aiming to increase its mortgage loan disbursement. Newly appointed consumer and commercial lending director Hirwandi Gafar said the bank would disburse an additional Rp 2 trillion in mortgages in December after the government agreed to increase the housing loan liquidity (FLPP) scheme quota this year, while it is also ready to disburse Rp 9 trillion for the FLPP scheme in 2020.

The mortgage-focused lender is also seeking funding from overseas, as Nixon said BTN was in talks with a Japan-based financial institution to help provide funding for suburban residential projects across the country targeting middle-class millennials.

Nixon said that, as the company was working to increase its loan-loss provision (CKPN) in accordance with the new accounting standard, which will take effect on Jan. 1, he expected this year’s net profit to reach only Rp 1 trillion.

In the meantime, he projected the bank’s CKPN rate to be at 127 percent in 2020, while its profit would climb to Rp 3 trillion and the nonperforming loan ratio would sit at around 3 percent to 3.1 percent by the end of next year.

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