Investor Presentaiton
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 competition in the credit market.
Prime Lending Rate and Deposit Rate Response to BI7DRR 1
Bank Indonesia has maintained an accommodative monetary and macroprudential
policy stance in order to stimulate economic growth.
Key Takeaways
The banking industry has continued to lower prime lending rates
(PLR), although the magnitude ofreductions has slowed. The cost of
loanable funds (CoLF) is still edging prime lending rates down, yet higher
profit margins have offset further reductions.
The risk premium in the banking industry is trending upwards,
pointing to a higher risk perceptionof the corporate sector.
Consequently, state-owned banks, national private commercial banks
and regional government banks raised lending rates on new loans in April
2021.
•
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, B17DRR and 1-Month Term Deposit Rate Performance
The banking industry has continued to lower prime lending rates (PLR) in
response to the BI policy rate, although the magnitude of reductions has slowed.
By bank group, state-owned banks were the main driver of lower PLR in the
banking industry.
.
.
By component, the cost of loanable funds (CoLF) remained the main contributor
to lower PLR. In the near term, the dynamics of PLR components are
characterised predominantly by higher profit margins in the banking industry
amidst a lower cost of loanable funds (COLF).
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.
1 Assessment period until April 2021.
Source: Bank Indonesia
14
12
그림
IN
2
G
4
14
13
10
28 8 8
2017
2018
Spread (SBDK BITDRR)
******* SUOK
2019
raph 2. Prime Lending Rates by Bank Group Graph
200
2019
== |||
HUMN
Source:inancial Services Authority (CU)), processed
10 на
SRT
073
2020
201
Spread (SBDK Sb depo 1 bin)
Deposito 1 bulan
3.50
Graph 3. Prime Lending Rate Performance by Component
B.UI
45
4.0
9.30
ай
10.21
05
30
870
1.75
35
$57
11.0
2020
2021
BUSH ***
K
4 2 2 8 4 2 2 2 5
4.63
3.03
2017
OHC
Margin Keuntungan
Source: Financial Services Authanty K, processedView entire presentation