Investor Presentaiton
3
a
7
Assessment of Policy Rate Transmission to Prime Lending Rates
in the Banking Industry
Bank Indonesia published the “Assessment of Policy Rate Transmission to Prime Lending Rates in the Banking Industry" to accelerate monetary policy
transmission and expand the dissemination of information to corporate and individual consumers in order to enhance governance, market discipline and
It market.
Key Takeaways
• The prime lending rate still shows a decline, supported by a decrease in the cost of
loanable funds (CoLF). The decrease mainly occurred in the regional banks.
• In line with the decline in the prime lending rate and improvement in the perception
of banking risk, new loan rates continues the downward trend. The decline in loan
interest rates occurred in almost all bank groups, except foreign bank branch office.
• Loan interest income still dominates banking operating income with an increasing
share compared to the previous year. Meanwhile, the share of fee-based income is
still relatively low, so banks still have room to increase their sources of income.
Pursuant to OJK Regulation (POJK) No. 37/POJK.03/2019 concerning Bank Report
Transparency and Publication, the PLR consists of three components, namely;
i. the cost of loanable funds (COLF), incl. the cost of funds, cost of services,
regulatory costs and other costs;
ii. overhead costs (OHC), incl. labour costs, education and training costs, R&D costs,
rental costs, promotion and marketing costs, maintenance and repair costs, fixed
asset and inventory depreciation costs as well as other overhead costs; and
iii. profit margin, which is determined by the respective bank for lending activity.
Graph 2. Prime Lending Rates by Bank Group
Prime Lending Rate and Deposit Rate Response to BI7DRR
Bank Indonesia has maintained an accommodative monetary and
macroprudential policy stance in order to stimulate economic growth.
•
•
12
10
8
Graph 3. Prime Lending Rate Performance by Component
8 6
6
Prior to the Covid-19 pandemic, from June 2019 until Feb 2020,
BI lowered the BI7DRR policy rate five times by a total of 125bps
from 6.00% to 4.75%.
From March 2020, Bank Indonesia lowered the policy rate
another four times (100bps) to a level of 3.75% in November
2020, and lower another 25 bps in Februari 2021 to 3.50%.
In terms of liquidity, accommodative monetary and
macroprudential policy significantly boosted liquidity in the
banking industry in order to maintain financial system stability
and the bank intermediation function.
Graph 1 Prime Lending Rate, BI7DRR and 1 Month Term Deposit Rate Performance
9.05
8.64 8.61
5.55
5.18
5.11
5.79
3.50
Sources: Financial Services Authority, Bank Indonesia
BUNN
BUSH
BCBA
1942
87184
5.70 330
3
1.70
JEG
2
23
1
Jan-19
Apr-19
BPD
Jul-19
6L-DO
Jan-20
BUMN
Apr-20
Jul-20
Od-20
Jan-21
Apr-21
BUSN
1.00
4
3.61
3.36 1.15
2.95 201
2
3.18
2.57 233
0
1.95
1.47 143
LZ-IN
Od-21
Jan-22
Jan-19
Feb-19
Mar-19
Apr 19
Feb-22
KCBA
Spread (SBDK BIZIDAR)
Deposito 1 bulan
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Spread (SBDK- Sb depo 1 bin) ***** SBOK
B17 DRR
350
Nov-20
Dec-20
Feb-21
Mar-21
Apr-21
May-21
Jun-21
Jul-21
Aug-21
Sep-21
Oct 21
Nov-21
Dec-21
Jan-22
Feb-22
97
2.82View entire presentation