Indonesian banks optimistic on corporate lending
(20 November 2015 – Indonesia) Indonesia’s biggest lenders have voiced their optimism that the central bank’s move to lower its primary reserve requirement ratio (GWM) will provide a much needed buffer to offer more affordable interest rates to corporate borrowers.
Earlier this week, Bank Indonesia (BI) maintained its key rate at 7.5 percent, but lowered the reserve requirement ratio (GWM) to 7.5 percent from 8 percent, effective from December 1.
The central bank said that a cut in the primary GWM would inject additional liquidity of around Rp US$1.31 billion (A$1.82 billion) into the financial system, which banks could use to boost their lending activities and also replace expensive funds that banks generate from time deposits.
CIMB Niaga finance and strategy director Wan Razly Abdullah told reporters: “We see that the additional liquidity will affect pricing structure as well as loan growth in CIMB Niaga this year.”
Other bankers have echoed that sentiment.
DBS Indonesia’s institutional banking director, Peter Suwardi, and Maybank Indonesia president director, Taswin Zakaria agreed that a loosening of liquidity would allow banks to increase their lending.
Bank Tabungan Negara treasury director, Iman Nugroho Soeko added: “The 0.5 percent cut on primary GWM will provide us some liquidity to be invested in productive assets that offer returns equal to those coming from loans, so that we can increase our net interest income.”
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