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Major local banks maintain loan growth targets despite BI rate hike
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Under the sky: Bank-owned skyscrapers are seen after office hours amid the COVID-19 pandemic in Jakarta on Aug. 27, 2021. (AFP/Bay Ismoyo)
B
ank Indonesia’s (BI) unexpected decision to raise its benchmark rate has raised concerns that banks will struggle to meet loan growth targets set for this year, but major players and analysts say the industry could still pull through given its ample liquidity to maintain lending expansion.
On the back of global uncertainties, BI increased its benchmark interest rates by 25 basis points (bps) on Oct. 19 despite a market consensus that the BI Seven-Day Repo Rate (BI7DDR) would remain at 5.75 percent.
In January, BI projected loan disbursement to grow between 10 and 12 percent this year. However, slower growth in the middle of the year pushed the central bank to lower its forecast to between 9 and 11 percent in August.
As of this September, loan growth hovered at 8.96 percent year on year (yoy), slower than the 9.06 percent in the previous month, according to the Financial Services Authority (OJK). However, the figure was still higher than the lowest point of this year at 7.76 percent as of June.
Dian Ediana Rae, who heads the banking supervision division at the OJK, said that the authority maintained double-digit loan growth by year end is still feasible.
"Historically, loan disbursement usually increases as we approach the end of the year, especially working capital loans," Dian said in a press conference on Monday.
Read also: BI unexpectedly hikes rate amid global uncertainty
