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Jakarta Post

Analysis: Banking sector: Bigger lending appetite on the menu

  • Teguh Putra Hartanto

  /   Thu, March 25 2010   /  10:46 am

Following 2009’s slow lending growth of 8.7 percent, we expect most domestic banks to have bigger appetites to lend this year.  As banks have higher risk tolerance and positive view on the current economic outlook, they have started to somewhat loosen their underwriting criteria.  This aggressive move has in fact been reflected in December 2009’s month-to-month loan growth of 2.8 percent, translating to a net addition of Rp 40 trillion (US$4.4 billion).  The low benchmark BI rate at 6.5 percent has also encouraged banks to relocate their earnings asset mix from Certificate of Bank Indonesia (SBI) to other attractive yielding assets, by growing their loan books or acquiring banks’ sub-debts.  This cycle has also seen more pronounced strength in the banks’ liquidity condition.  Loan to Deposit Ratio (LDR) registered at 74.6 percent at end December 2009 vis-...