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LENDING & CREDIT | Cesar Tordesillas, Indonesia
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Indonesia's BCA expects less lending due to down payment regulations

PT Bank Central Asia expects lower consumer lending due to the implementation of minimum down payments.

 

The bank noted that mortgage and vehicle lending are the most affected.

A new central bank regulation requires minimum down payments of 25 percent for motorcycle loans from banks, 30 percent for auto loans, 20 percent for commercial vehicles and 30 percent for house lending.

The regulation aims to slow the rapid growth of mortgage and vehicle lending.

Banks’ total housing and automotive loans grew an average of 32 percent last year, higher than the overall 24.9 percent loan growth.

BCA president director Jahja Setiaatmadja estimates that the fall in the bank’s mortgage and vehicle lending will be lower than the 10 to 15 percent drop projected for the country’s banking and financing industry.

“Each bank has different lending trends because they have their different market segments. The industry may see a 10 to 15 percent decline in mortgage and vehicle lending. BCA also anticipates [lending] to go down but it is estimated to be below 10 percent,” said Jahja.

BCA's consumer loans grew by 37.8 percent to Rp 53.3 trillion during the January-March period. Mortgages grew by 56.7 percent to Rp 30.6 trillion, while automotive loans increased 24.8 percent to Rp 17.9 trillion. BCA is hoping to see around a 20 percent increase in overall credits this year.

Although the new down payment rule went into effect on June 15, creditors were already adjusting to the new requirement as early as May.

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