•    HOME   
•    NEWS   
•    BUSINESS   
•    INTERNATIONAL   
•    TECH   
•    SPORTS   
•    LIFE & TIMES   
•    OPINION   
•    MY JAKARTA   
•    BLOGS   

PT Bank CIMB Niaga, the country’s second-largest mortgage lender, said on Thursday that demand for home mortgages was showing signs of recovery in the second half, after slower growth in the first.

The bank’s total outstanding mortgage loans stood at Rp 12.7 trillion ($1.3 billion) at the end of June, down from Rp 13.4 trillion at the beginning of the year, said Daniel James Rompas, CIMB’s vice president director.

However the bank predicted that the downward trend would be reversed in the second half. At the end of September outstanding mortgage loans were at Rp 13 trillion and they were expected to hit Rp 14 trillion by the end of the year, Daniel said.

“Fourth-quarter new loans will be higher than third quarter. To date, October new loan bookings have been the highest this year,” he said.

The growth in mortgage lending has been fueled by falling interest rates, with average mortgage rates now standing at 9.9 percent, down from higher than 10 percent a year earlier.

The company said it was considering issuing asset-backed securities to finance part of its expansion of mortgage lending next year. Another option was to issue subordinated debt, Daniel said.

CIMB’s mortgage lending is dominated by residential housing, which constitutes 80 percent of its loan book, with the rest coming from condominiums and retail.

The bank has 11 percent of the national mortgage market.

State owned PT Bank Tabungan Negara is the country’s largest mortgage lender with a 26 percent market share.

During the first nine months of 2009, CIMB’s overall outstanding loans grew by 3 percent to Rp 74.1 trillion. The slow growth was slightly below the banking sector’s average, which reached 4 percent year-on-year at the end of August.

CIMB is the country’s fifth largest bank by asset value.