Indonesia revises down 2020 credit growth to 4 percent
Indonesia’s Financial Services Authority (FSA) has revised the country’s credit growth down to just 4 percent this year compared to 2019 - far from the initial 11 percent.
FSA revised down the national bank loans growth to only 4 percent in this year, far from the initial estimate of 11 percent compared to 2019. (Photo: TheInsiderStories)
Jakarta (VNA) - Indonesia’s Financial Services Authority (FSA) has revised the country’scredit growth down to just 4 percent this year compared to 2019 - far from theinitial 11 percent.
Therevision is based on the development of credit realisation over recent monthsand changes in the business plans of banks.
Accordingto FSA chairman Wimboh Santoso, distribution of credit was hampered by COVID-19and was reflected in bank credit growth in May, which was only 3.04 percent year-on-year.
Though slowing,he remains optimistic that bank loans will gradually improve and return tonormal in the beginning of 2021. He noted that non-performing loans (NPLs) wereunder control, with a ratio of 2.77 percent.
He was alsooptimistic that bad loans could be maintained at under 3 percent, in line withthe implementation of debt restructuring. Based on FSA data, the capitaladequacy ratio as of May remained safe, at 22.14 percent.
The latestBanking Survey conducted by Bank Indonesia pointed out declines in new loan growthin the second quarter of 2020, with the weighted net balance of demand for newloans deteriorating significantly, to -33.9 percent compared with 23.7 percentin the previous period and 78.3 percent in the same period last year.Respondents confirmed the declining growth of all loan types, investment loansin particular.
Surveyrespondents expect new loan growth to rebound in the third quarter, though not atthe rate seen in previous years. They predicted looser lending policies in thethird quarter of the year.
Banksexpect to ease lending standards on all loan types through credit lines,collateral requirements, and loan maturity. The latest survey also indicatesslower credit growth in 2020, at 2.5percent - much lower than the credit realisation in 2019 of 6.1 percent and the 5.5percent predicted in the previous survey./.
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FSA revised down the national bank loans growth to only 4 percent in this year, far from the initial estimate of 11 percent compared to 2019. (Photo: TheInsiderStories) 
