Indonesia's Bank Mutiara to focus on low-cost funds

Bank Mutiara will increase the proportion of its low-cost funds to total third-party funds.

This is to support credit expansion.

Mutiara’s third-party funds reached Rp 13.4 trillion as of the end of 2012, increasing by about 20 percent compared to Rp 11.2 trillion year-on-year. About 15 percent of the total third-party funds, equal to around Rp 2 trillion, were current account and savings account, which gave lower interest rates to customers, according to Mutiara managing director Benny Purnomo.

The remaining 85 percent of the 2012 total third-party funds were time deposits.

“Our target is for a CASA increase of around 50 percent this year compared to last year,” Benny said.

Maintaining low-cost funds such as savings and checking accounts is necessary for banks as they can use the low-interest funding to disburse loans with higher interest rates. A higher proportion of low-cost funds compared to high-cost funds will also reduce the bank’s total cost of funds, the interest burden it has to pay to customers.

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