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.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsLower interest rates minor boost for credit growth: LPS
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
Deposit Insurance Corporation (LPS) economist Doddy Ariefianto answering questions at Bank Central Asia (BCA) Economic Outlook 2017 in Jakarta on Dec. 14. (JP/Anton Hermansyah)
T
he local banking industry has reached a point where interest rate cuts would no longer create a significant increase in credit growth, the Deposit Insurance Corporation (LPS) has suggested.
LPS economist Doddy Ariefianto said while businesses had started to see improving conditions from indications such as higher commodity prices and exports, they preferred to “wait and see” before taking new loans.
"Banks are also being less aggressive. Instead of disbursing loans to new customers and incurring a high risk of bad loans, they are opting to wait for their existing debtors to take another loan," Doddy said on Wednesday on the sidelines of Bank Central Asia (BCA) Economic Outlook 2017 in Jakarta.
He added that currently the average non-performing loan (NPL) ratio stood at around 3.4 percent, based on the latest data in September, not far off the 5 percent safe limit. Many banks, he said, were currently busy restructuring their loans.
"Hopefully the credit restructuring will be complete by the beginning of 2017, so that banks can speed up their loan disbursement again," he said.
Data from Bank Indonesia (BI) showed that between January and October, banks had already cut their loan rates by 62 basis points. Credit growth, meanwhile, stood at 7.4 percent year-on-year in November. (hwa)
