Bank Permata play down drop in SBI rate<\/p>\n
Evi Mariani, The Jakarta Post, Jakarta<\/p>\n
Bank Permata said that the drop in the interest rate of one-month
\nBank Indonesia SBI promissory notes would not create financial
\ndifficulties for the medium-sized bank, as its main source of
\nprofit is its lending activities.<\/p>\n
Bank Permata director Elvyn G. Masassya acknowledged on
\nSaturday that the steep decline in the SBI rate would reduce
\ninterest revenue from recapitalization bonds, but this could be
\noffset by a higher interest revenue from loans.<\/p>\n
\"We still make a profit every month,\" he said.<\/p>\n
The bank currently holds Rp 11.3 trillion (US$1.37 billion) in
\nbonds, of which Rp 7 trillion is in variable rate bonds, whose
\ninterest rate is directly linked to the SBI rate. The lower the
\nSBI rate, the lower the interest revenue from the bonds.<\/p>\n
The government injected an enormous amount of bonds into some
\nailing banks in the late 1990s to help them survive the financial
\ncrisis of the time. The banks obtain interest revenues from the
\nbonds, which have been the main source of revenue for the banks
\nin the last few years.<\/p>\n
The central bank has been paring down its SBI rate in a bid to
\nmake bank loans more affordable to the corporate sector, and to
\nhelp ease the burden of the government in servicing its domestic
\ndebts, which will have a positive impact on the national economy.<\/p>\n
The SBI rate dropped to an historic level of 9.71 percent last
\nweek, compared to around 17 percent earlier last year. Central
\nbank officials said that there was still room for further cuts in
\nthe SBI rate.<\/p>\n
But the falling SBI rate may negatively affect the
\nprofitability of banks whose revenue still rely on the interest
\nfrom recapitalization bonds.<\/p>\n
Elvyn said that Bank Permata would provide up to Rp 3 trillion
\nin new loans this year, after booking a net profit of Rp 102
\nbillion in the first quarter.<\/p>\n
The bank's capital adequacy ratio (CAR) stands at 10.3
\npercent, above the central bank's minimum requirement of 8
\npercent. The CAR is the ratio between capital and risk-weighted
\nassets, and the higher the CAR, the healthier the bank.<\/p>\n
Meanwhile, Bank Permata's non-performing loan (NPL) ratio is
\nat 9.7 percent, well above Bank Indonesia's maximum of 5 percent.<\/p>\n
To reduce the ratio, Bank Permata has started selling its NPL
\nassets and taken restructuring measures.<\/p>\n
Elvyn voiced his optimism that the bank's NPL would reach
\nbelow 5 percent by the end of the second quarter, the deadline
\nset by the central bank.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-permata-play-down-drop-in-sbi-rate-1447893297",
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"sponsor": "Okusi Associates",
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