BCA upbeat about lending expansion despite rate hike

The Jakarta Post, Jakarta

Despite an increase in its loan interest rates, Bank Central Asia (BCA) remains optimistic that they will be able to meet their own full-year loan forecast, according to one executive.

BCA general manager for consumer banking Stephen Liestyo said on Thursday the bank projected that loan expansion in the second semester would still be high and reach about Rp 13 trillion (some US$1.31 billion) by the end of the year, the same amount of new loans booked in the first semester.

The bank is still about Rp 4 trillion short of the target, but "We are upbeat we can achieve it by the end of the year," said Stephen.

Following Bank Indonesia's move to increase a interest rates twice in less than two weeks, most banks have now adjusted their interest rates for deposits and savings, as well as lending.

In the case of BCA, it has raised loan interest rates by 1 percent to a maximum of 16 percent.

Betting on continued strong growth in consumer loans however, Stephen said the rate hike would not hamper the bank's ability to meet the target.

"Even though some people have projected that the (possible) hike in inflation will weaken purchasing power, I still believe consumer loans will grow," he said on the sidelines of a ceremony.

"The market for consumer loans is still growing. We won't see it declines in the near future."

Earlier, BCA president director Djohan E. Setijoso said that as of June, consumer loans stood at Rp 7.5 trillion, consisting of Rp 3.6 trillion for vehicle loans, Rp 2.8 trillion for house ownership and Rp 987 billion for credit cards.

The amount made up 17.16 percent of the bank's outstanding loans, which reached at Rp 43.71 trillion in the first six months of this year.

Speaking about the possibility of a raise in non-performing loans (NPLs) because of rate hikes, he replied: "The management would prefer an extension of the loans to qualified borrowers with good reputations."

As of June, the bank's NPL reached 1.73 percent, far below the 5 percent minimum requirement set by the central bank. (006)