The central bank also issued a number of other policies that lower the minimum holding period of Bank Indonesia certificates (SBI) from 6 months to 1 month; bank ownership on certificates of deposit of Bank Indonesia (SDBI) will calculate as a secondary reserve requirement; extension of BSA period worth U.S. $ 12 billion by the Bank of Japan.
This aggressive assess that increase BI rate considere be able to restore confidence in the rupiah currency. The inflation forecast to 9% and 5% YoY in the midst of a weakening rupiah projections (each 10% depreciation of the rupiah will make inflation rise 0.8 % points) and due to the new CPI weightings that will impact effectively on the fourth quarter (Q4) of 2013.
The analyst (Mandiri Securities Research) predicts the economic growth will slow and also revised GDP to 5.8% in 2013 and 5.9% in 2014, from previous assumptions respectively by 5.9% and 6.3%.
BI rate hike will affect the banking sector, especially in terms of GDP growth that will impact on credit growth expectations. Some economists also predict that the central bank may raise the BI rate by 25 bps to 50 bps again until the end of the year and make the BI rate sit at 7.25% -7.5% by the end of the year.
BI rate hike also impact the credit sector that primarily slowing down the credit growth, non-performing loans (NPL), and lowering th margin.
Even so, some banks that have a large excess funds (as evidenced by the low ratio of loans to deposits / LDR) and has a low of time deposits. The two banks would benefit most are PT Bank Central Asia Tbk (BBCA, Rp8.950, NEUTRAL, TP Rp9.700) and BMRI.
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