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View all search resultsSOE lending push raises concentration risks for state banks: S&P
S&P Global Ratings has cautioned about earnings and concentration risks at state lenders amid rising exposure to state-owned enterprises (SOEs) and the government’s economic programs, which has expanded their loan growth at twice the industry rate.
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High-rise buildings are pictured in Jakarta’s business district on Nov. 4, 2025. (REUTERS/Willy Kurniawan)
S
&P Global Ratings has cautioned about earnings and concentration risks at state lenders amid rising exposure to state-owned enterprises (SOEs) and the government’s economic programs, which has expanded their loan growth at twice the industry rate.
Nikita Anand, an analyst at S&P Global Ratings, told The Jakarta Post on Tuesday that the materiality of the risk depends heavily on the repayment track record of these large-ticket borrowers.
“Any significant increase in concentration, or deterioration in the credit quality of these SOEs, could expose banks to large-scale defaults, potentially triggering spikes in credit costs and impacting both earnings and capitalization through higher provisioning,” she explained.
S&P has flagged the asset quality of recent SOE loans as a “watchpoint” due to the elevated concentration risk.
The agency is closely monitoring the first repayment from state-owned agriculture firm PT Agrinas Pangan Nusantara, which is tasked with running the flagship Red and White Cooperatives program, scheduled for September.
Read also: Cooperatives financing raises concerns over SOE banks, fiscal risks
“While banks have the recourse to claim shortfalls from the government, the practical efficiency of this mechanism remains untested, making the upcoming repayment cycles a critical period for monitoring,” Nikita said.
