Bank Jatim recorded gross non-performing loans (NPLs) at 4.2 percent due to a slowing economy in East Java, reducing its profit and capital as the bank has had to allocate provision for potential bad debts.

Medium business and corporate director Su'udi said the increasing NPLs had eroded the bank'€™s capital adequacy ratio (CAR) to 21.2 percent in 2015 and predicted they would drag it down further to 19.21 percent this year.

"Thus, we will start credit restructuring and create an ad hoc team to resolve the NPL problem. In an optimistic scenario, gross NPL for 2016 is targeted at 2.8 percent," Su'udi said at a press conference in the Mandarin Oriental Hotel on Thursday.

Consumer loans were the leading credit at Bank Jatim in 2015, reaching Rp 18.2 trillion (US$1.3 billion), accounting for 64 percent of total loans disbursed.

Commercial loans, which stood at Rp 5.7 trillion, accounted for 20 percent, while the portion of small and medium enterprises (SME) loans was 16 percent, worth Rp 4.5 trillion.

However, in terms of growth, commercial loans recorded the highest increase of 10 percent year on year (YoY). Consumer loans and SME loans recorded 8.8 and 5.2 percent in growth, respectively.

Bank Jatim corporate secretary Ferdian Timur Satyagraha said the bank was eyeing a 15 percent growth in loans this year. The company will allocate 80 percent of its productive loans to SMEs and the remaining 20 percent to commercial loans. (ags)

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia