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JAKARTA (TheInsiderStories) – The Financial Services Authority reported banking credits in January 2018 grew by 7.40 per cent year-on-year (yoy), slower than same period last year of 8.24 per cent, driven by sluggish demand in mining and agricultural sector.

In terms of fundraising, banking third-party funds grew by 8.36 percent (yoy).

However, the authority stated that the stability and liquidity condition of the financial services industry in February 2018 was well-maintained in line with global and national economic developments.

“The economy remains stable and moves on the right track to get better this year,” said Deputy Commissioner of FSA John Santoso on Thursday (01/03).

The FSA has targeted the loan to grow by 10-12 per cent this year, supported by the improving economic performance of the United States (US), Europe, Japan and China that is getting more solid and equitable. Positive developments in the US economy are shown by rising inflation, rising wages, and low unemployment rates.

Domestically, FSA outlined that macroeconomic indicators are moving solidly, despite the volatility in rupiah currency.

Nevertheless, the improvement in real sector indicators is still limited and economic growth in the fourth quarter of 2017 is still increasing moderately.

Meanwhile, the fund-raising, through bonds issue, rights issue and new listing — in the capital market until February 27, 2018 reached Rp22 trillion,  with only one company listed on the Indonesian Stock Exchange in the month.

In the midst of the development of financial intermediation, the risk of financial services institutions (credit risk, market, and liquidity) in January 2018 is at the managed level.

The bank’s non-performing loan (NPL) ratio stood at 2.86 per cent (gross) and the finance company’s non-performing financing (NPF) ratio was 2.95 per cent.

“FSA will continue to monitor the dynamics of the global economy and its impact on the performance of the national financial services sector, particularly the Fed Fund Rate increase and the trend of higher interest rates in global financial markets,” Santoso said.

Meanwhile, bankers are banking on stronger consumer lending to take the lead in an otherwise slow year, according to a PricewaterhouseCoopers (PwC) Indonesia survey published Tuesday.

The PwC survey involved 65 banking executives from 49 banks, and showed that 71 per cent of respondents believed consumer lending would grow more than 10 per cent, considerably higher than 57 per cent of respondents in 2017.

As for overall loan growth, 38 per cent of respondents projected growth of 10 per cent to 15 per cent, compared to 27 per cent of respondents last year.

The survey also showed that fewer banks had targeted growth of more than 20 per cent. Based on the response, PwC estimated that overall lending growth would fall by between 2-3 percentage points.

Email: elisa.valenta@theinsiderstories.com