Commercial banks raise deposit rates
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.
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.
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.
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.
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.
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."
The executive declined to project how long the lending rates will be maintained.
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.
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.
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.
Adjustment
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.
"I think commercial banks will not increase their lending rates for the time being," he said.
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.
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.
The inflation reached 3.95 percent during the first four months of this year.
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)