Housing bank refuses to cut hiked rates

JAKARTA (JP): Bank Tabungan Negara, a state-owned bank specializing in housing credits, ruled-out reversing its decision to increase interest rates on its housing loans, in spite of appeals from legislators.

The bank's credit director, Pandamsih, said at the opening of a housing exhibition at the Jakarta Convention Center yesterday that the interest rate increase, which was planned in May, was in line with the upward trend of lending rates charged by other banks.

A member of the House of Representatives' Commission V, Koensholehoedin, suggested yesterday that the bank cancel the decision to raise interest rates or, at least, postpone the hike until after the commemoration of the Indonesian anniversary on Aug. 17.

Beginning early this month, the bank has raised the interest rate for the purchase of houses measuring more than 70 square meters from 17.5 percent per annum to 19 percent.

The bank has also raised the interest rate on larger houses from 18 percent to 20 percent a year.

However, the interest rate on credit for the purchase of houses measuring a maximum of 21 square meters was maintained at 8.5 percent a year and that for the purchase of houses measuring over 21 square meters but not more than 70 square meters at 11 percent.

As of last year, the bank booked total assets of Rp 6.86 trillion (US$3.04 billion) and outstanding loans of Rp 4.84 trillion, while its after-tax profit was recorded at Rp 72.69 billion. The bank's capital adequacy ratio was 33.8 percent, far higher than the minimum standard of nine percent imposed on domestic banks. (31)