Bank Jakarta Opts for Quality Growth Amid Rising Interest Rates

Bank Jakarta is adopting a strategy of healthy and quality growth amid increasing cost of fund pressures and an increasingly challenging financial industry dynamic. Bank Jakarta President Director Agus H. Widodo said the company will not pursue aggressive growth in a constantly changing market. Instead, Bank Jakarta will be more selective in developing its business by prioritising asset quality and sustainable growth. “We are not chasing massive growth, but rather healthy and quality growth,” Agus said. According to him, the banking industry is currently facing new challenges that differ from those of a few years ago. Besides global economic uncertainty, banks are also beginning to face rising cost of funds that could potentially pressure industry performance. Agus revealed that deposit rates in fund auctions had touched 11.5 percent. This condition signals increasing fund collection costs that the banking industry must anticipate. “This is a warning for the banking sector. It means the cost of funds for banks will rise very significantly going forward,” he said. Nevertheless, Agus stressed that the rising cost of funds does not mean halting Bank Jakarta’s expansion steps. The company continues to prepare various strategies to maintain business growth while preserving portfolio quality. One of the steps taken is diversifying funding sources, including optimising the potential for low-cost funds originating from the DKI Jakarta Provincial Government ecosystem. Amid these various challenges, Agus assessed that the fundamental condition of the national banking industry remains strong. This is reflected in still-positive credit growth, high capital adequacy levels, maintained liquidity, and a controlled non-performing loan ratio. “The problem is not actually in the fundamentals, but the playing field has changed,” he said. According to Agus, in recent years the financial industry has faced various unpredictable events, ranging from the pandemic and global geopolitical conflicts to changes in international trade policies affecting financial markets. To address these challenges, Bank Jakarta continues to carry out transformation across various business lines, from business transformation and digitalisation to strengthening risk management and establishing a new work culture. Agus said changes in customer behaviour are also an important factor driving the transformation of the banking industry. Today, people no longer just look at the products offered by a bank, but also consider the ease, speed, security, and completeness of the services available. “People no longer see a bank based on its products, but on how easy, cheap, fast, and secure the services or even the ecosystem offered by the bank itself are,” he said. Through a selective growth strategy and sustainable transformation, Bank Jakarta is optimistic it can maintain healthy growth while enhancing competitiveness amid the increasingly dynamic financial industry landscape.