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RI credit growth will tend to slow down: Perbanas
Indonesian Banks Association (Perbanas) chairman Sigit Pramono said Indonesiaâs credit growth will likely slow down in the next several years because of limited liquidity
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ndonesian Banks Association (Perbanas) chairman Sigit Pramono said Indonesia's credit growth will likely slow down in the next several years because of limited liquidity.
'We expect from now on that the credit growth in the next years cannot be similar with the previous years because the loan-to-deposit ratio (LDR) has continued to increase and liquidity is getting tight,' he said in Jakarta on Wednesday, as quoted by Antara news agency.
Sigit admitted that overall, banks would unlikely be able to stop issuing credit, but will instead adjust their credit growth to the liquidity available.
'If the LDR stands at 90 percent, it is certain that banks would hold back the credit growth rate,' he said.
The banking expert went on to say it was probable that the net interest margin on banks would become lower due to the credit growth slowdown.
Sigit said the problems the banking industry would be facing in the future were related to capital planning.
'Private, foreign and regional banks must get capital because our LDR is above 90 percent. In the beginning of President Susilo Bambang Yudhoyono's administration, the LDR was between 40 and 50 percent, which was very low, so that the growth of credit was quite huge. Currently, the LDR is almost 100 percent,' he said.
An LDR level of almost 100 percent was very dangerous, as this would possibly lead to liquidity disturbance in the country, he said. (ebf)
