Indonesian banks maintained strong profit growth in July amid improving efficiency and a rise in income from fees and securities, despite a central bank move to tighten mortgage and automotive loans weighing on lending.
The country’s 120 commercial banks posted collective profits of Rp 7.2 trillion ($752 million) in July, up 36 percent from the same period last year. The figures were derived by subtracting the January-June numbers from the seven-month data reported by Bank Indonesia on Friday.
In the first seven months, banks’ combined profit rose 25 percent to Rp 52.9 trillion.
Commercial banks lowered their BOPO ratio — a measure of bank efficiency that compare their operating expense to operating income — to 74.9 percent in July from 87.4 percent in the same month in 2011.
A lower BOPO ratio is preferable as that would mean a bank makes more income for every rupiah it loans, and its operating expenses are smaller.
Banks posted a 39 percent increase in other operating income — such as fees and gains from securities assets — to Rp 12.4 trillion.
The lenders also reduced their operating costs slightly to Rp 20.8 trillion, down 0.1 percent from last year.
Bank Indonesia in mid-June introduced requirements that raised the down payments consumers were compelled to make for motorcycle, cars and homes in a move to prevent a bubble in those sectors and curb excessive consumer loan growth.
Consumers who finance their motorcycle purchases via bank loan must pay a minimum of 25 percent of the price tag as a down payment. For passenger cars, that requirement is 30 percent.
The new rule also imposes a 30 percent down payment on the purchase of homes that cover more than 70 square meters.
There were no such rules prior to the mid-June requirement, but banks usually ask for 10 to 20 percent of the purchase price as down payment.
Central bank data showed that commercial banks disbursed Rp 17.4 trillion in loans in July, down 25 percent from the same period last year. In line with the declines in loan growth, commercial banks’ net interest income — the money it makes from loans minus deposits — dropped 30 percent to Rp 10.7 trillion in July.
Housing loans, however, more than doubled, to Rp 6.6 trillion from Rp 2.4 trillion. Overall, commercial banks’ outstanding loans climbed 25 percent to Rp 2,488 trillion in July.