Indonesian government released dual-currency bonds with total amount US$3.1 billion for deficit financing in this year, said the finance ministry today (01/09) - Photo: Privacy

JAKARTA (TheInsiderStories) – Indonesian Financial Services Authority (FSA) revised the loan growth in the range 8-10 percent this year, the official told media Today (11/19). In the midterm of 2019, FSA was optimistic the loan growth will be in the range of 12-14 percent.

The revision is based on a bank business plan which targetted this year’s loan growth of more or less 10 percent. Also, the assumption is made after seeing thoroughly the loan growth in the first half of 2019, said the chairman Wimboh Santoso.

“The loan growth began to slow down since the end of the first half of 2019,” he adds, saying the slowdown was increasingly greater in the third quarter of 2019 by weakened 7.89 percent to Rp5,464.97 trillion (US$390.35 billion). While the banking industry still experienced double-digit growth or around 11 percent in May 2019.

Meanwhile, Bank Indonesia in its latest report stated that the slowdown of loan growth caused by declining of corporate demand. In Step 2019, the loan disbursement to big debtor slumped by 8.1 percent, lower than the previous month of 9.4 percent.

Based on the type of use, the slowdown of loan growth occurred in a working capital loan which reached Rp2,552.3 trillion. The condition was obviously happened in the hotel, trade and tourism sector by declining 5 percent year on year (YoY), lower than the previous month of 6 percent YoY.

The banking industry also experienced the same thing. Chief Executive Officer Citibank Batara Sianturi said that Citibank’s loan growth was slowing down in the third quarter of 2019 because the corporate rescheduled the booking of loan to next year.

The rescheduling was caused by the presidential election this year. As a result, Sianturi viewed that the company will be struggled to achieve 8 percent loan growth for this year.

“This year, the loan growth will be below 8 percent, lower than last year which booked double-digit growth,” he said.

However, the company will still generate the main sectors to boost loan growth which are manufacturing, mining, and financial intermediary sectors. Also, the company will optimize the institutional banking sector to support this year’s loan growth.

Besides Citibank, one of the largest lenders in Indonesia, PT Bank Mandiri Tbk (IDX: BMRI) also revised this year’s loan growth to 9 percent, lower than the initial target of 13 percent. Director Business and Channeling Bank Mandiri Hery Gunardi said that the slowdown was caused by the shifting from high-risk loans to lower risk of the loan, such as the commercial sector and the personal sector.

“We focused on the quality and margin of loan, not only the volume of loan disbursement,” he said.

The senior officer of Bank Mandiri also said that the slowdown did not only happen in the corporate sector but also in the retail sector, especially in the car and motorcycle loan which targetted from 15-20 percent, revised to around 11 percent. However, the automotive loan is not only a loan segment in Bank Mandiri, but the company will also focus on a personal loan by targetting civil and servant and military who have a fixed income.

On the other hand, PT Bank Central Asia Tbk (IDX: BBCA) also confirmed that the loan growth in 2019 getting slower. President Director of BCA Jahja Setiaatmadja explained that the slowdown occurred in almost of loan sector caused by the uncertainty of global condition.

Therefore, Setiaatmadja viewed that loan growth of BCA for this year will be in the range of 9-10 percent and it will be hard to achieve double-digit growth for this year. However, there is still an opportunity in syndication loans for toll road projects, transportation, and power plant.

Setiaatmadja added that the banking also needs to the concern of nonperforming loan (NPL) as the slowdown of loan growth. BCA also paid attention to this matter and maintain NPL in a range of 1.4 percent.


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