Promising Start for Loan Growth in 2017 – 19 May 2017

  • Lending activities showed a promising start for local banks in the first four months of 2017, bolstering chances for further economic recovery for the rest of the year.
  • Lending from commercial banks grew by 9.5% y/y in Apr 17, accelerating from Mar 17’s 9.2% y/y and Feb 17’s 8.6%, Bank Indonesia, the country’s central bank, said on 18 May 17.
  • Data from Indonesia’s Financial Services Authority (OJK) showed outstanding loans at Indonesian commercial lenders had amounted to IDR4,308tr (USD323bn) in Feb 17.
  • Loan growth was seen mostly in sectors related to infrastructure, including agriculture, utility and construction.
  • Previously, Finance Minister Sri Mulyani Indrawati said loan growth is likely to accelerate by as much as 11% in 2017 on the back of healthy performances by banks.
  • Bank Indonesia meanwhile expects loan growth to reach around 10% to 12% in 2017 thanks to rising economic growth and the impact of monetary policy easing.
  • Bank Indonesia Governor Agus Martowadojo said local lenders have struggled with bad loans and have been more cautious in giving out new loans, limiting the effectiveness of the central bank’s policy easing, which included a total rate cut of 150 basis points in 2016.
  • Non-performing loans (NPLs) stood at 3% (gross) or 1.3% (net) by the end of Mar 17, both still below the 5% threshold that will be deemed as alarming by the central bank.

External Link :