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Jakarta Post

OJK turns less upbeat on bank loan growth

  • Grace D. Amianti

    The Jakarta Post

Jakarta   /   Fri, July 8, 2016   /  12:39 pm
OJK turns less upbeat on bank loan growth This file picture shows the logo of Indonesia's Financial Services Authority (OJK). OJK chairman Muliaman Hadad said nationwide commercial banks' lending will likely grow slower than its previous expectation of 12 to 13 percent. (Tempo/Tony Hartawan)

The Financial Services Authority (OJK) is set to revise down its prediction for growth in bank loans this year due to the country’s weaker-than-expected economy.

OJK chairman Muliaman D. Hadad said the banking supervisor was currently assessing revised business plans submitted last month by domestic lenders that had to reset their loan growth and other targets based on their performance in the first half of the year.

“Bank loans by the end of this year will probably grow faster than in 2015, but we assume it will be below our target set earlier this year,” he said on Thursday.

The OJK previously projected that loans in the banking industry would grow by 12 to 13 percent this year, while Bank Indonesia (BI) set a slightly more optimistic range of 12 to 14 percent.

BI’s latest data show the country’s loan growth stood at 8 percent year-on-year (yoy) as of May, higher than the 7.7 percent rate posted for April.

Seeing negative effects from a weak economy and rising bad loans, some major banks have decided to revise down their loan growth target this year.

For instance, state-owned Bank Mandiri, the country’s largest lender by assets, revised down its loan growth target to between 8 and 10 percent, far lower than the 12 to 14 percent range set previously. (est)