The country's fourth largest bank by assets, Bank Rakyat Indonesia (BRI), signed a memorandum of understanding Friday on apartment mortgages with property developer Pikko Group so as to boost the bank's consumer lending.
BRI director for consumer banking A. Toni Soetirto said just before the signing ceremony that apartment market was a lucrative one in Indonesia.
Toni cited industry figures showing that the sale of apartments rose by 2.85 percent in the second quarter of the year over the previous quarter, with the market absorption rate standing at 86.08 percent for existing complexes and 45.08 percent for those still under construction.
"Other banks have earlier entered the market, so why won't we?" said Toni, adding that BRI was hoping to boost its apartment mortgage business by teaming up with experienced property developers.
With the signing of the memorandum of understanding, BRI will provide loans for people wanting to buy apartments in three complexes developed by the Pikko Group, namely the Sahid Sudirman Residence and Hampton's Park, both in South Jakarta, and Maple Park in Central Jakarta.
Joyce Farida Rosandi, BRI vice president of consumer credit, said that apartment mortgages were expected to more than triple the bank's total mortgage portfolio to Rp 4 trillion (US$429.65 million) by the end of the year from Rp 1.2 trillion as of last December.
Joyce said that as of June, BRI's mortgage book stood at Rp 1.8 trillion, nearly all of which comprised house mortgages, with only a fraction of the total consisting of apartment mortgages.
In 2006, BRI recorded a net profit of Rp 4.26 trillion, one of the highest in the industry. In the January-May period, it booked Rp 2.1 trillion in net profit. (11)