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ome of the nation'€™s major banks expect lower growth in their corporate loans this year as major companies will likely slow down their business expansion amid the expected decline in the country'€™s economic growth.

Fransisca Nelwan Mok, corporate banking director with Indonesia'€™s largest lender by assets, Bank Mandiri, said demand for credit from companies could slow to less than 10 percent this year, compared with a 28.8 percent surge in 2013.

'€œOur growth will not be as high as in previous years. That is in line with the expected lower gross domestic product [GDP] growth and the lower lending prediction set by the authorities,'€ Fransisca said on Wednesday, citing manufacturing, plantations, mining, real estate and trading as the top sectors for corporate lending this year.

After a three-year period of over 6 percent GDP growth, Indonesia'€™s economy slowed last year to 5.78 percent mainly due to a slowdown in exports while higher interest rates undermined consumption. Bank Indonesia (BI) recently cut its growth estimate to between 5.5 and 5.9 percent from 5.8 to 6.2 percent previously, as domestic demand and investment have slowed while exports are seen as sluggish.

Indonesia'€™s economy is driven primarily by domestic consumption.

Bank Central Asia (BCA), the nation'€™s biggest private lender, also expected growth in the corporate loan segment to slide to below 20 percent from 21 percent in 2013, said president director Jahja Setiaatmadja.

'€œAlmost all of our loan segments will be affected by lower business, such as retail, small- and medium-scale enterprises and corporate,'€ Jahja said. Manufacturing, plantations, transportation, logistics and power companies are among BCA'€™s top destinations in disbursing corporate loans.

Another top lender, state-owned Bank Negara Indonesia (BNI), has also predicted a significant decrease in corporate loan growth this year to between 15 and 18 percent from about 55 percent in 2013, according to BNI president director Gatot M. Suwondo.

Financial regulators BI and the Financial Services Authority (OJK) have urged banks to put the brakes on lending expansion this year as aggressive loan growth would trigger demand, and with tight liquidity, consumer prices could spike. Credit growth should only be between 15 and 17 percent this year, lower than the 22 percent achieved in 2013, according to the regulators.

'€œCredit growth is expected to further slow in 2014,'€ BI said in its latest survey of 42 commercial banks in Indonesia that account for 80 percent of credit in the country, which was published early this year. '€œThe continued economic growth slowdown and an increase in interest rates have become the main consideration of respondents in projecting 2014 loan growth, which is lower than the previous year.'€

BI raised Indonesia'€™s benchmark interest rate by 150 basis points throughout 2013 to 7.5 percent and has kept it at that level until now, and that is expected to affect interest rates that banks charge to their customers, therefore reducing the appetite among borrowers to lend.

Bank CIMB Niaga, the fifth-largest bank in the country, has sought corporate loans being pressured last year as they only grew 1 percent. But president director Arwin Rasyid told The Jakarta Post that the bank would try to grow its corporate lending segment by 15 percent this year, while '€œa slowdown is expected in the housing and automotive sectors'€.

'€œThe year 2013 was challenging for the banking industry in Indonesia, including for CIMB Niaga, with an increase in interest rates and inflationary pressures as a result of increased subsidized fuel prices and the weakening rupiah, and we predict such economic conditions will continue in 2014,'€ Arwin said recently, in a press statement.