Observer: Reference Interest Rate Rises, Banking Industry Players Must Maintain NIM Balance

Banking observers and practitioners of the payment system Arianto Muditomo said banking industry players need to maintain a balance of the net interest margin (NIM) so that they can still make profits amid the increase in the benchmark interest rate of Bank Indonesia (BI).

According to him, this is because the increase in the benchmark interest rate has the potential to reduce credit demand.

"The main step is to adjust deposit interest and loan. In addition, banks must continue to maintain the balance of NIM," said Arianto Muditomo, quoted from Antara, Wednesday.

He said that the NIM balance can be maintained by looking for low-cost sources of low-cost Current Account Saving Account (CASA) and expanding carefully and productively.

He also said that banking industry players need to continue to innovate in developing attractive financing products for prospective debtors.

"On the operational side, banks must continue to look for innovation and efficiency and wise steps in managing loss reserves, especially those from credit risk," said Arianto.

BI on Wednesday officially announced an increase in BI's benchmark interest rate by 25 basis points to 6.25 percent and raised the deposit facility interest rate by 25 basis points to 5.5 percent and the lending facility interest rate by 25 basis points to 7 percent.

"This increase in interest rates is to strengthen the stability of the Rupiah exchange rate from the possibility of worsening global risks as well as pre-emptive and forward looking steps to ensure inflation remains on target," said BI Governor Perry Warjiyo in Jakarta, Wednesday.

He also said that bank credit increased 12.4 percent year-on-year (yoy) in the first quarter of 2024. This year's credit growth is also expected to continue to increase and be in the range of 10-12 percent.