LENDING & CREDIT | Cesar Tordesillas, Indonesia

Danamon, BTN post growth, buck new Indonesian loan rules

Bank Danamon and Bank Tabungan Negara posted huge business growth, despite new loan-to-value regulations affecting vehicle and housing credits.

Danamon booked Rp 2.99 trillion or US$311 million in consolidated net profits in the first nine months of the year, up 22 percent from Rp 2.45 trillion in the same period last year, while BTN reported that its net profits increased 45 percent to Rp 1.02 trillion, up from Rp 704 billion.

Danamon’s lending rose 16 percent to Rp 113.27 trillion as of the end of September, compared to Rp 97.43 trillion in the same period last year.

“We actually started to experience the impact of the regulations on minimum down payments, particularly for loans for motorcycles, which is run by our subsidiary PT Adira Finance. However, we have seen that credit in other segments has increased,” said Danamon chief financial officer Vera Eve Lim .

She said that Adira’s lending for vehicles rose 15 percent to Rp 45 trillion as of the end of the third quarter, compared to the same period last year.

The company reported that its motorcycle lending rose only 5 percent, beating the average for the motorcycle industry, which has seen total sales slump by 13.9 percent due to the implementation of minimum down payment regulations in July.

BTN, whose housing loans contributed 86 percent to its total loans, said that implementation of the regulations did not affect the lender’s growth in housing loans.

The state-owned lender reported that its total credit issued rose 29 percent to Rp 76.57 trillion as of the end of the third quarter, up from Rp 59.31 trillion in the same period last year.

Bank Indonesia implemented regulations that increased the minimum amount of down payments that customers had to pay to banks or other financing firms to avoid overheating in several rapidly growing credit sectors, including vehicle and mortgage loans.

The central bank’s regulation said that commercial banks could issue individual housing and automotive loans to cover a maximum of 70 percent of the item’s total value, while it set the limit for motorcycle loans at 75 percent. Previously, the LTV ratio for all lending stood at 80 percent.

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