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Executive Column: The underbanked are Indonesia's capital
Mel Carvill, nonexecutive director of Home Credit, recently visited Jakarta to touch base with colleagues at the lender’s Indonesia headquarters. He discussed finance industry trends and economic developments in Indonesia with The Jakarta Post's Mark Lempp and Fadhil Haidar Sulaeman on Oct. 13.
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Mel Carvill, nonexecutive director of Home Credit (Home Credit International/-)
M
em>Mel Carvill, nonexecutive director of Home Credit, recently visited Jakarta to touch base with colleagues at the lender’s Indonesia headquarters.
He discussed finance industry trends and economic developments in Indonesia with The Jakarta Post's Mark Lempp and Fadhil Haidar Sulaeman on Oct. 13.
Question: What is the current global state of the financing industry?
Answer: If you think about the economics of the lenders, higher interest rates are usually better for lenders, because lenders make their money on the net interest margin, the difference between what they pay and what they charge in interest, less costs, less bad debts.
Higher interest rates tend to increase their interest margin. But on the flip side of that, higher interest rates have the potential to lead to economic slowdown that can lead to people having less income, or losing their jobs, which can mean higher losses.
Successful lenders depend very much on the balance between the potentially higher income and potential losses, so what normally happens in those times is lenders are more cautious on giving people loans.
How is Indonesia performing?
