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Indonesia to see worst NPL in second half: Analyst
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The Bank Indonesia logo is seen on the main gate of the central bank's headquarters in Jakarta. (Antara/File)
T
he banking industry will face a tough challenge in the second half as non-performing loans (NPL) are likely to reach the worst level of the year, a researcher has warned.
Amid the challenging economic conditions, the NPL will likely peak in the third and fourth quarters, said Tjandra Lienandjaja, an equity research at Mandiri Sekuritas, a subsidiary of the nation’s largest lender in terms of assets, Bank Mandiri, in a research report published on Sept. 6.
As of June 2016, the banking industry saw increasing NPL by 20 basis points (bps) to 2.9 percent, compared to the March level of 2.7 percent. Meanwhile, the special-mention loans level declined from 5.6 percent to 5.2 percent.
“The decrease was due to their downgraded status into NPL. The main contributing sectors for the NPL this year will be mining, manufacturing and metal. The metal industry is impacted by competition with Chinese products,” he said as quoted by kontan.co.id on Tuesday in Jakarta.
The NPL in the oil and gas sector reached to 6.3 percent in June, above the tolerable level of 5 percent. The transportation and telecommunications sectors followed at 5.5 percent.
In response, Bank CIMB Niaga finance director Wan Razly Abdullah said the lender would focus on loan restructuring and selling collateral assets. Meanwhile, Bank Tabungan Negara finance director Iman Nugroho Soeko chose to maintain a conservative loan target, eyeing 2.99 percent NPL by year-end. (ags)
