Commercial banks raise deposit rates
<p>Commercial banks raise deposit rates </p><p> JAKARTA (JP): A number of commercial banks have raised deposit
rates by as many as three percentage points but are promising to
keep lending rates at their present levels.</p><p>Mulyadi, Bank Bali's vice president, told The Jakarta Post
yesterday that the bank has raised the interest rate on one-month
deposits to 10.5 percent per year from nine percent last week and
three-month deposits to 11.5 percent from 10 percent.</p><p>Bank Bali has also increased its six-month deposit rate to 12
percent per year from 10.5 percent and its 12-month deposit rate
to 12.5 percent from 11 percent.</p><p>Bank Pinaesaan, a small bank with headquarters in
Ujungpandang, South Sulawesi, has even increased annual interest
rates on one-month deposits by three percentage points to 16
percent and its three-month deposits by 2.875 points to 16.25
percent.</p><p>The bank, however, has slightly reduced the rate on its six-
month deposits to 13.75 percent per year from 13.875 percent and
its 12-month deposits to 14 percent from 14.375 percent.</p><p>When asked about interest rates on lending, Mulyadi said "We
will maintain our lending rates at their current levels of about
17 to 18 percent per year." </p><p>The executive declined to project how long the lending rates
will be maintained.</p><p>Earlier this week, three state-owned commercial banks, Bank
Bumi Daya, Bank Tabungan Negara and Bank BNI, raised the interest
rate on their one-month deposits from eight to nine percent per
annum and their three-month deposits from nine to 10 percent.</p><p>Those state banks, however, did not change the rate on their
six-month and 12-month deposits from their level of 11 percent
per annum.</p><p>Lippobank has also increased the annual interest rate on
deposits with maturity of one to three months by 0.5 percentage
point to 10 and 10.50 percent respectively. The bank, however,
still maintained their six and 12 month deposit rate at 11
percent.</p><p>Adjustment</p><p> Paul Sutopo, a director of Bank Indonesia, the central bank,
said commercial banks apparently adjust their deposit rates to
the supply and demand conditions in the banking industry.</p><p>"I think commercial banks will not increase their lending
rates for the time being," he said.</p><p>The rises in the deposit rates is linked with last weeks'
decision of the Federal Reserve, the U.S. central bank, to raise
short-term interest rates for the third time this year by 0.25
percent.</p><p>Analysts said that rise in the U.S. interest rates, coupled
with the high inflation in the country and the government's plan
to accelerate the depreciation of the rupiah against the U.S.
dollar to six percent this year from about three percent last
year, has encouraged investors to transfer their deposits from
rupiah into dollars.</p><p>The inflation reached 3.95 percent during the first four
months of this year.</p><p>One analyst, who requested anonymity, estimated that about Rp
450 billion (US$209 million) in time deposits are transferred
into American dollars every day. (04)</p>
rates by as many as three percentage points but are promising to
keep lending rates at their present levels.</p><p>Mulyadi, Bank Bali's vice president, told The Jakarta Post
yesterday that the bank has raised the interest rate on one-month
deposits to 10.5 percent per year from nine percent last week and
three-month deposits to 11.5 percent from 10 percent.</p><p>Bank Bali has also increased its six-month deposit rate to 12
percent per year from 10.5 percent and its 12-month deposit rate
to 12.5 percent from 11 percent.</p><p>Bank Pinaesaan, a small bank with headquarters in
Ujungpandang, South Sulawesi, has even increased annual interest
rates on one-month deposits by three percentage points to 16
percent and its three-month deposits by 2.875 points to 16.25
percent.</p><p>The bank, however, has slightly reduced the rate on its six-
month deposits to 13.75 percent per year from 13.875 percent and
its 12-month deposits to 14 percent from 14.375 percent.</p><p>When asked about interest rates on lending, Mulyadi said "We
will maintain our lending rates at their current levels of about
17 to 18 percent per year." </p><p>The executive declined to project how long the lending rates
will be maintained.</p><p>Earlier this week, three state-owned commercial banks, Bank
Bumi Daya, Bank Tabungan Negara and Bank BNI, raised the interest
rate on their one-month deposits from eight to nine percent per
annum and their three-month deposits from nine to 10 percent.</p><p>Those state banks, however, did not change the rate on their
six-month and 12-month deposits from their level of 11 percent
per annum.</p><p>Lippobank has also increased the annual interest rate on
deposits with maturity of one to three months by 0.5 percentage
point to 10 and 10.50 percent respectively. The bank, however,
still maintained their six and 12 month deposit rate at 11
percent.</p><p>Adjustment</p><p> Paul Sutopo, a director of Bank Indonesia, the central bank,
said commercial banks apparently adjust their deposit rates to
the supply and demand conditions in the banking industry.</p><p>"I think commercial banks will not increase their lending
rates for the time being," he said.</p><p>The rises in the deposit rates is linked with last weeks'
decision of the Federal Reserve, the U.S. central bank, to raise
short-term interest rates for the third time this year by 0.25
percent.</p><p>Analysts said that rise in the U.S. interest rates, coupled
with the high inflation in the country and the government's plan
to accelerate the depreciation of the rupiah against the U.S.
dollar to six percent this year from about three percent last
year, has encouraged investors to transfer their deposits from
rupiah into dollars.</p><p>The inflation reached 3.95 percent during the first four
months of this year.</p><p>One analyst, who requested anonymity, estimated that about Rp
450 billion (US$209 million) in time deposits are transferred
into American dollars every day. (04)</p>