Indonesia’s Bank Syariah Mandiri lowers minimum down payment for home financing

JAKARTA – Indonesia’s largest Shariah-compliant bank by assets, Bank Syariah Mandiri, has cut the minimum down payment buyers must pay for first home purchases to 10-15 percent from 15-20 percent following the central bank’s relaxation on the financing-to-value (FTV) ratio requirement for home financing in August, Dharmawan Hadad, its Corporate Secretary told Salaam Gateway. 

Hadad said the lower down payment will boost BSM’s home financing portfolio and help it achieve its 16.13 percent growth target this year.

At the end of July, the bank’s home financing book reached 9.36 trillion Indonesian rupiah ($705 million), up by 13.95 percent from 8.22 trillion rupiah at the same time last year.

“Our customers are required to pay only 10-15 percent down payment. 10 percent is available for houses with maximum size of 70 square meters. We provide property financing of up to 85 to 90 percent,” he said.

BSM reported a net non-performing financing (NPF) ratio of 3.74 percent in June, an improvement from 4.7 percent in the same month last year. This is within the central bank's 5 percent NPF limit.

Its gross NPF ratio has improved from 6.67 percent in June 2015 to 5.58 percent in the same month this year.

BSM’s financing-to-deposit ratio (FDR), a measure of liquidity, has fallen from 85.01 percent in June last year to 82.31 percent year-on-year.

Indonesia's bank loans and financing grew 8.9 percent on an annual basis throughout the first half of this year, compared to 10.4 percent a year ago, according to Bank Indonesia, the country's central bank.

The regulator eased credit requirements last month to stimulate economic growth by raising the loan-to-value (LTV) ratio, or financing-to-value (FTV) ratio for Islamic banks.

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