Allo Bank Navigates High Deposit Rate Environment with Strategic Cost Management
Executive Summary
Key insights and market outlook
Allo Bank (BBHI) is managing its cost of funds (COF) amid high deposit rates by offering deposits up to 5.5%, down from previous maximum of 7.5%. The bank maintains a strategic and selective approach to deposit gathering while keeping strict balance sheet management. This strategy helps Allo Bank remain competitive while controlling funding costs in a challenging environment where deposit rates exceed the LPS-guaranteed maximum of 3.5%.
Deep Dive Analysis
Allo Bank's Strategic Response to High Deposit Rates
Managing Cost of Funds in Competitive Environment
PT Allo Bank Indonesia Tbk (BBHI) is implementing a measured approach to managing its cost of funds amid intense competition in the deposit market. The bank currently offers deposit rates up to 5.5%, which represents a reduction from its previous maximum of 7.5%. Despite this adjustment, the offered rates remain significantly higher than the 3.5% maximum guaranteed by the Indonesian Deposit Insurance Corporation (LPS).
Strategic Deposit Gathering Approach
Head of Digital Strategy at Allo Bank, Destya D. Pradityo, explained that while high deposit rates impact the bank's cost of funds, the strategy is being executed in a measured and selective manner. The bank is maintaining strict balance sheet management to ensure that the higher funding costs do not negatively impact its overall financial performance.
Market Context and Competitive Landscape
The current high deposit rate environment presents both challenges and opportunities for banks like Allo Bank. While it increases funding costs, it also allows for more competitive deposit gathering strategies. Allo Bank's approach demonstrates its commitment to balancing growth with prudent financial management in a competitive banking landscape.
Source References
Story Info
Topics Covered
Key Events
Deposit Rate Adjustment
Cost of Funds Management