Bank Tabungan Negara (BTN) to boost Shariah home ownership loans

As of November 2023, BTN Syariah’s assets have reached IDR 49 trillion.

Despite being the largest Muslim country in the world, Indonesia presents an Islamic finance market share of only 10.94% of total national finance, based on figures released by the Financial Services Authority (OJK) in 2023.

Needless to say, the share of Shariah banking assets is minimal, accounting for only 7.3% of the total banking assets of the country.

One of the initiatives to bridge this gap comes from Bank Tabungan Negara’s (BTN) target to increase the Shariah home ownership loan (KPR) market.

BTN Syariah itself has three home ownership loan payment schemes, namely KPR BTN Indent iB, KPR BTN Platinum iB, and KPR BTN Property with the Musyarakah Mutanaqisah scheme.

KPR BTN Indent iB is a financing facility for owning houses, shops, offices, apartments, or flats in a Shariah-compliant manner based on orders through the Istishna contract (custom order-based buying and selling).

KPR BTN Platinum iB, on the other hand, is Shariah-compliant financing for home ownership, shops, and apartments, whether for the first, second, or even third time, with fixed installments over the financing period through the Murabahah contract (buying and selling).

Finally, through the Musyarakah Mutanaqisah scheme of KPR BTN Property, customers can pay installments gradually as agreed with the bank.

In addition, BTN Syariah is said to provide comprehensive housing financing, from land ownership, house construction, home ownership financing, to home renovation. UUS Bank BTN also focuses on providing financing for low-income communities (MBR).

Based on the financial report released in September 2023, the business of BTN Syariah was still dominated by the distribution of Shariah-based Home Ownership Loans (KPR) or KPR BTN iB, both subsidised and non-subsidised.

The composition of Shariah-based KPR occupied 92.53% of the total financing of BTN Syariah, equivalent to IDR 33.11 trillion as of last September.

Subsidised KPR BTN iB, targeting the subsidised segment, recorded an annual growth in distribution of 21.67% (year-on-year/yoy) to IDR 22 trillion as of the financial report’s release date.

Meanwhile, non-subsidised KPR BTN iB grew by 15.32% yoy to IDR 11.11 trillion as of the same cut-off last September.

Asset growth

The Shariah Business Unit (UUS), owned by BTN, is expected to surpass the asset position of IDR 50 trillion by the end of 2023. This output is driven by the rapid distribution of financing throughout 2023.

Bank BTN President Director Nixon LP Napitupulu said that as of November 2023, BTN Syariah’s assets had reached IDR 49 trillion. “In line with the government stimulus in the housing sector and the high interest of the community in Shariah financing, I am optimistic that BTN Syariah's assets will exceed IDR 50 trillion by the end of 2023,” he said.

The increase in BTN Syariah’s assets also boasts an impressive track record. From 2018 to 2022, BTN Syariah recorded a compound annual growth rate (CAGR) of 9.8% in assets growth per year for the last five years. Nixon mentioned that the exact figure of the position of BTN Syariah’s assets will be soon presented in the full-year 2023 performance report.

Preparing for spin-off

Napitupulu has ensured that alongside soaring financing, the quality of BTN Syariah’s financing remains intact.

With maintained quality of financing growth, he believes that BTN Syariah will be able to become one of the large Islamic banks in Indonesia that can cater to various customer needs for home ownership with Shariah financing schemes.

“BTN Syariah has a strong Shariah financing infrastructure and a wide network of developer partners, so we are confident that we can meet the needs of the Indonesian people to own homes with Shariah financing,” he said.

With this asset position, UUS Bank BTN has met the requirements for a spin-off.

Financial Services Authority Regulation (POJK) No. 12 of 2023 states that if the total assets of UUS exceed IDR 50 trillion, it is mandatory to undergo separation with certain stages. OJK also regulates the deadline for submitting separation approval, which is no later than two years after the deadline for submitting quarterly public reports.