TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
OJK targets double-digit loan growth for banks this year
Indonesian lenders only booked a 3 percent year-on-year rise in third-party funds in November 2023, continuing sluggish growth in that metric since the beginning of last year.
Change Size
The sky is the limit: Bank-owned skyscrapers in Jakarta are pictured after office hours on Aug. 27, 2021. (AFP/Bay Ismoyo)
L
oan disbursement by Indonesian banks fell short of the government’s target in November of last year, rising only 9.74 percent year-on-year (yoy), according to the Financial Services Authority (OJK).
The agency aims for "healthy" bank loan growth this year to support the country's annual economic growth target of 5.2 percent. It had a “double-digit” target for 2023.
"Based on the banks' business plans [submitted to us] for the period of 2024 to 2026, we anticipate double-digit growth, supported by robust consumer activity and the upcoming general election," Dian Ediana Rae, who heads the banking supervision division at the OJK, said at a press briefing on Tuesday.
However, growth in third-party funds has been sluggish since the beginning of last year, rising only 3.04 percent yoy in November. That is down from 3.43 percent yoy growth in October and much lower than the rate of 8.78 percent yoy logged in November 2022.
According to Dian, the slowdown in third-party funds was attributable to the rise of alternative saving instruments as well as to the fact that companies were digging into their internal funds for business expansion while individuals were spending more on consumption. A statistical base effect was also at play, Dian noted.
The trend is reflected in the OJK's loan-to-deposit ratio (LDR) target of 84 to 86 percent for this year, higher than December 2022's LDR of 78.8 percent. Some analysts opined that should that trend persist, it could hamper loan growth, as shrinking savings left banks with less money to lend.
The OJK announced at the same media briefing that the industry-wide nonperforming loan (NPL) rate stood at 2.36 percent in November, in line with the OJK’s target of 2 to 2.5 percent stated for this year.
