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Growth in bank loans less than 12 percent in 2016: HSBC
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A Bank Indonesia employee marks damaged rupiah notes at Bank Indonesia in Jakarta on Jan. 26. (the jakarta post/Wienda Parwitasari)
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ritish-based bank HSBC is not optimistic about bank loan growth in Indonesia this year, arguing that market conditions in Indonesia, driven by commodity exports, remain sluggish.
The 13.98 percent growth in loans aimed for by Financial Service Authority (OJK) in its bank business plan is too high, said HSBC Indonesia managing director Ali Setiawan. However, he expected Indonesia to achieve five percent gross domestic product (GDP) growth this year.
"Looking at the economic conditions, the target of 12 to 13 percent credit growth is not realistic," Ali told thejakartapost.com in Jakarta on Thursday.
He acknowledged that bank credit grew 8 percent in the first quarter, but he was not so optimistic about the second quarter. Despite the government’s intention to cut the interest rate, cheaper loans will not quickly translate into higher credit growth, Ali said.
"Because banks are currently in a reconciliation process. They need to wait for cheaper third party funds to flow in, then they can offer cheaper credit. Meanwhile, most corporate enterprises are delaying expansion and reducing credit. This means there will be more idle funds in banks," he said.
More efficient disbursement of state spending could prevent this situation from getting worse. However, such a move would likely affect state-owned banks before foreign banks, Nirmala Salli, the head of global trade and receivable finance at HSBC Indonesia, added.
"State-owned banks will benefit more from spending on infrastructure. Usually we, as foreign banks, get the leftovers that they can’t absorb," she said. (ags)
