Boosting KPR, CIMB Niaga Waits For BI Rate To Drop

CIMB Niaga (Photo: Antara)

JAKARTA - PT Bank CIMB Niaga Tbk took steps to look forward to the opportunity to reduce the benchmark interest rate (BI Rate). This is to boost financing in the home ownership credit sector (KPR).

"We from banks hope that the BI rate will start to decline at least in the second half of this year," said CIMB Niaga President Director Lani Darmawan quoting Antara.

He explained that the opening of the Bank Indonesia (BI) benchmark interest rate reduction provided an opportunity to reduce the cost of funds or cost of funds.

So far, banks have spent money, including to return third party funds (DPK), such as savings in the form of savings and deposits. If the cost of funds decreases, he continued, mortgage interest will also be adjusted.

Based on official CIMB Niaga website data, the basic lending rate (SBDK) for the period February 29 to March 30, 2024, SBDK for mortgage consumption loans reaches 7.55 percent per year.

However, the interest rates imposed on debtors are not necessarily the same as the SBDK because the basic interest rate does not take into account the components of the estimated debtor risk premium which depend on the bank's assessment.

In terms of credit realization performance in banks with codes on the BNGA stock exchange floor in 2023, it reached IDR 213.4 trillion, an increase of 8.5 percent sourced from corporate credit growth, then MSMEs and consumption loans.

Meanwhile, DPK during 2023 reached IDR 235.9 trillion, an increase of 3.8 percent compared to 2022 which was dominated by low-cost funds (saving) reaching almost 64 percent.

"I'm sure that overall in 2024 interest rates should start to decline," he added.

He projects that if there is a decrease in the benchmark interest rate followed by adjustment of deposit interest rates and credit, there will be improvements for the net interest margin (NIM).

The reason, he said, is that banks in the last two to three years have contracted.

"DPK fees are expensive, high interest deposits but low interest loans (credit)," he said.

He estimates the central bank will lower to a total of 100 basis points and is projected to be carried out gradually from June to the end of 2024.

Previously, the BI Board of Governors Meeting (RDG) on February 20-21, 2024, determined to maintain a fixed benchmark interest rate or BI Rate of six percent.

Even so, BI Governor Perry Warjiyo revealed that the space for lowering the benchmark interest rate could still occur by taking into account a number of indicators, including controlled inflation, stronger rupiah, and good economic growth.