Bankers say that they anticipate an increase in interest rates for LPS

KONTAN.CO.ID – JAKARTA. The Deposit Insurance Corporation (LPS) has decided to raise the Bank guarantee rate in rupees by 25 basis points to 6.75%.

This increase is mainly due to the current upward trend in deposit rates in the banking sector. Indeed, many banks are still adjusting the rise in lending rates after the Bank of Indonesia (BI) raised its key rate by 150 basis points this year.

Several banks contacted by Kontan.co.id said they had anticipated this increase. Santoso Liem, director of PT Bank Central Asia Tbk (BCA), for example said that his party was expecting an increase corresponding to the continuous increase in the interest of deposits in the market.

"Of course, at BCA, we will have adjustments, but what kinds of adjustments we still have to discuss first," he told Kontan.co.id on Tuesday (30/10).

Well, with regard to the potential for continued increase in interest rates, since the Fed 's benchmark interest rate is expected to rise again in December 2018, the company' s l '. considered.

"It is clear that the Fed in December and next year will raise interest rates three times," he continued. Santoso said in this regard that in the future, bank liquidity could be even more restricted.

"The main reference (interest adjustment) comes from the 7-day repos and other instruments LPS will certainly determine the guarantee interest based on BI and market policies. but also the liquidity of the market and banks will also vary, "he continued.

Prior to BCA's performance presentation (25/10), Eugene K Galbraith, Vice President of the BCA, said unpredictable global uncertainties would continue to increase bank interests. According to forecasts, BCA will adjust interest rates on loans and deposits to 200 basis points.

BCA also increased interest rates on term deposits, ie deposits in the range of 150 basis points, following the rise in BI reference interest rates since May 2018 and so far.

Santoso said each bank has its own liquidity management policy, including the policy of increasing interest on deposits and credits. Depending on the liquidity situation of each bank.

For his part, Mahelan Prabantarikso, PT Bank's director, Tabungan Negara Tbk (BTN), said the increase in the LPS guarantee interest rate was based on prevailing conditions in the banking sector. In other words, if LPS raises its guarantee interest rate, it means that the bank has actually raised its interest rates.

"In the future, the bank will monitor the evolution of the BI reference interest rate," he said.

LPS