BTN Eyes 18 Percent Loan Growth in 2015


FEBRUARY 08, 2015

Jakarta. Bank Tabungan Negara, the biggest home lender in Indonesia, has set a target to see loans growing 17 to 18 percent this year, its chief said on Friday.

BTN’s outstanding loan stood at Rp 115 trillion ($9.73 billion) last year, up 14.47 percent from the previous year.

Maryono, president director of the listed state-controlled lender, said the pace of lending could be faster, should the government’s plan to build a million houses this year be successful.

President Joko Widodo has set the ambitious target to help reduce the country’s housing backlog. According to a 2010 census by the Central Statistics Agency (BPS), the housing backlog in Indonesia then stood at 13.6 million units. An estimate made by the ministry of public works and public housing at the end of 2014 showed that the backlog has grown to 15 million units.

“With such a program, our loan growth might be faster,” Maryono said on the sideline of a property seminar in Jakarta on Friday, without providing specifics.

Some have doubted Joko’s plan to build so many houses this year, as developers have warned high interest rates, slowing growth and tougher central bank regulations on home loans may hamper the efforts.

Maryono said, using rough calculations, should Indonesia plans to plug the housing backlog, then it will need at least Rp 1.2 trillion, with an average house price of Rp 120 million each. “Let’s say that from 13.6 million families, 10 million need financing [from banks]. If a house is tagged at Rp 120 million, then we need Rp 1.2 trillion, at least,” he said.

The central bank raised its key interest rate, the BI rate, several times in 2013 and once in 2014.

The rate has risen from a previous record low of 5.75 percent before June 2013, to 7.75 percent currently.

The higher BI rate pushed lending rates, including for mortgages, higher.

The central bank has issued a series of regulations, which aims to tighten controls in the growth of mortgage loans by requiring customers to put down higher deposits, and require developers to complete construction before banks can disburse the home-ownership loans.