JAKARTA (TheInsiderStories) – Major banks in Indonesia reported that their financial result and loans growth until September (9M) of 2020 had decreased due to the pandemic. The banks are PT Bank Rakyat Indonesia Tbk (IDX: BBRI), PT Bank Central Asia Tbk (IDX: BBCA), PT Bank Mandiri Tbk (IDX: BMRI), PT Bank Negara Indonesia Tbk (IDX: BBNI), PT Bank CIMB Niaga Tbk (IDX: BNGA), PT Bank Pan Indonesia Tbk (IDX: PNBN), and PT Bank Danamon Indonesia Tbk (IDX: BDMN).
The largest commercial bank in the country, Bank Rakyat Indonesia reported the net profit contracted 43 percent to Rp14.12 trillion (US$1.01 billion) in nine months of this year compared to the same period in 2019 worth of Rp24.78 trillion. The CEO, Sunarso, said the profit grew but not as big as 2019, due to the debt restructuring that requires sufficient and adequate reserves. He also believed the loan growth until the end of this year still grow around 5 percent.
Other state-owned lender, Bank Mandiri also reported the net profit declined by 30.7 percent in 9M of this year compared to last year, from Rp20.25 trillion to Rp14.03 trillion. Net interest income recorded Rp42.16 trillion, or down 4.1 percent from last year at Rp43.94 trillion.
Other largest bank, Bank Central Asia also reported the nine month’ profit fell by 4.2 percent to Rp20.04 trillion. At the same period, lending growth also dropped by 0.6 percent to Rp581.9 trillion. Next Bank Negara Indonesia, Bank Danamon, Bank Panin also recorded a decrease in net profit pressured by the COVID-19 pandemic.
Earlier, Financial Services Authority (FSA) predicted that national bank profits will decline around 30 to 40 percent in this year compared to 2019. Based on the agency data, from April to June, the lender profits before taxes have decreased by 19.8 percent from last year.
According to the chairman, Wimboh Santoso, the declined was understandable because of the large number of credit restructuring during the pandemic. But he was optimistic with the sector’ equity still quite strong at 23 percent was sufficient to support a size-able loans growth.
The agency reported the Indonesian banking loans only grew 1.49 percent in June from previous month rose by 3.04 percent caused the virus outbreak. Until July 23, preliminary data showed that lending distributions slightly better grow 2.27 percent or worth of Rp5,576 trillion (US$384.55 billion) compared to last year.
Santoso said on August 4, the deepest weakening growth experienced by the BOOK 3 banks. As for the third-party deposit, still able growing 7.95 from previous year rose 8.87 percent and from April 2020 at 5.73 percent.
Last July, FSA has revised down this year’ loan growth only 4 percent, far from the initial estimates of 11 percent compared to 2019. The revision is based on the development of the credit realization in recent months and change in business plans from the national banks.
Even slowing down, he is optimistic that bank loans will gradually improve and start to normal again at the beginning of 2021. Santoso also optimistic that bank’ bad loans could still be maintained in the range of under 3 percent inline with the implementation of the debt restructuring.
While, the latest Banking Survey conducted by Bank Indonesia pointed out the declining of new loan growth in the second quarter (2Q) of 2020, with the weighted net balance of demand for new loans deteriorating significantly to -33.9 percent compared with 23.7 percent in the previous period and 78.3 percent in the 2Q of 2019. Respondents confirmed the declining growth of all loan types, investment loans in particular.
In addition, the survey respondents expected new loan growth to rebound in the third quarter of 2019, even though not as high as the same period in the previous year. They predicted looser lending policy in the 3Q of 2020, as indicated by a marked decline in the Lending Standard Index to 3.9 percent from 34.4 percent in the previous period.
The banks expected to ease lending standards on all loan types through credit lines, collateral requirements and loan maturity. The latest survey also indicated slower credit growth in 2020. Respondents predicted credit growth in 2020 at 2.5 percent (YoY), lower than credit realization in 2019 at 6.1 percent as well as the 5.5 percent prediction in the previous survey.
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