JAKARTA (TheInsiderStories) – Indonesian Deposit Insurance Corporation (DIS) estimates that credit growth until the end of 2018 is grow around 13 percent with a loan-to-deposit ratio (LDR) above 92 percent. One fact is that capital is still quite strong.
According to the Chief Executive Fauzi Ichsan, the loan growth in the third quarter (3Q) of 2018 was estimated at around 13 percent while third party funds dropped to 6.6 percent. Whereas the LDR of national banking nine months (9M) period was around 94 percent.
“We estimate that by 2018, the third party funds will grow by 7.2 percent or be corrected from the previous eight percent,” he said in Jakarta, on Tuesday (30/10).
Nevertheless, Ichsan said, Indonesia’s banking conditions were still healthy despite several indicators weakening. Banking capital is still quite good despite the capital adequacy ratio (CAR) down from 22.7 percent to 22.4 percent.
“We estimate that if credit rises, bank capital will remain strong enough. It’s just this, case by case, because there are around 115 banks and conditions vary,” said the executive.
He added, with the CAR position at 22 percent, Indonesian banking was one of the strongest in the region. Usually, he said, the CAR position of banks in other countries was only around 19 percent.
Meanwhile, the DIS Board of Commissioners Meeting earlier this week has evaluated and determined the guarantee interest rate. Both for deposits in Rupiah and foreign exchange in Commercial Banks and Rural Banks.
As a result, the agency determined, the guarantee rate for the period Oct. 31st, 2018 to Jan. 12th, 2019 for deposits in Rupiah at commercial banks and BPRs each increased by 25 basis points (bps). While foreign exchange at commercial banks has not changed.
In that way, the interest rate for guaranteeing deposits in Rupiahs at commercial banks is 6.75 percent and in rural banks is 9.25 percent. While foreign exchange deposits remain 2.00 percent.
Board of Commissioners member Destry Damayanti added, the interest rate on deposit guarantee was set to increase based on several considerations. First, interest rates on banking deposits continued to rise in response to the increase in monetary policy rates and the potential is still continuing.
“Secondly, liquidity conditions and risks are still relatively well maintained. It’s just that there is a tendency to increase amid the rising trend in deposit rates and improvement in lending,” said Damayanti.
Third, Financial System Stability is observed to be stable. Although there are pressures stemming from a decline in exchange rates and volatility in financial markets.
She continued, referring to PLPS Number 2 Year 2014, the DIS set a guarantee rate three times a year, which is in the second week of January, May and September. Except if there is a change in significant economic and banking conditions.
“In line with the aim of protecting customers and expanding the coverage of guarantees. We calls on banks to pay more attention to the interest rate on deposit insurance in the context of raising funds,” added by Damayanti.
In running its business, the bank should pay attention to future liquidity conditions. Thus, the bank is expected to be able to comply with the provisions of economic liquidity management by Bank Indonesia, as well as the regulation and supervision of banking by the Financial Services Authority, said her.
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