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ational credit growth decelerated in the third quarter and the slowdown is estimated to persist in the fourth quarter, according to Bank Indonesia'€™s (BI) latest banking survey, which was issued on Tuesday.

The survey is published on a quarterly basis by the central bank and questions 42 commercial banks, whose shares account for 80 percent of the lending market.

It noted that there had been a decline in the growth of new loan disbursement in the third quarter in all loan segments: investment loans, working loans and consumer loans.

According to the survey'€™s net weighted balance measurement, the growth stood at 75.3 percent in the third quarter, down from 87.9 percent in the previous quarter.

The net weighted balance measurement calculates the average loans balance during a specific time period.

Respondents to the survey attributed the lower credit growth to relatively low credit demand from customers, rising interest rates and growing risks in investment and working loans.

'€œNon-performing loans [NPL] in the investment and working-capital segments tended to increase in the third quarter, while those in consumer loans were relatively stable,'€ the survey stated.

NPLs in both segments were close to 2.5 percent, whereas in the second quarter they were between 2 percent and 2.3 percent. At present, financial regulators set the NPL benchmark at 5 percent.

The survey also revealed that the lowest credit demands came from a number of sectors, including mining, transportation and trading. In terms of use, it was import-related loans that were squeezed during the period.

Similar to the third quarter, respondents said that the slowdown in the economy would continue to cloud the industry, with another credit slowdown and interest rate hike predicted to occur in the fourth quarter.

According to the measurement, the net weighted balance is predicted to fall to 62.8 percent in the last quarter of the year from 75.3 percent in the third quarter.

Meanwhile, the average annual interest rate for investment loans is projected to rise by 15 basis points (bps) to 13.39 percent, while the working capital rate looks set to increase 14 bps to 13.47 percent and the consumer rate to surge 17 bps to 14.81 percent.

Overall, respondents revised their credit growth forecast quite drastically for the whole year. The annual growth is predicted to be 14.4 percent, whereas three months ago they were upbeat that the growth would stay at 18.2 percent.

The revised forecast is much lower than the 15 percent to 17 percent range set by financial regulators.

When contacted, Bank Central Asia (BCA) president director Jahja Setiaatmadja said that the private lender had no plans yet to increase its lending interest rate and that it had maintained the same rate since the third quarter of 2013.

'€œOur lending is estimated to have risen by 10 percent in the third quarter from the same period last year. Approaching year-end, I think that businesses will first look at the political stability and the new Cabinet,'€ he said.

Meanwhile, Bank Mandiri finance and strategy director Pahala N. Mansury said that even though the bank recorded a slowdown in new credit disbursement in the third quarter, it was optimistic about an improvement in the last three months of 2014.