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.

Jakarta Post

OJK predicts 13 percent loan growth next year

The Financial Services Authority (OJK) has forecast an improvement in the growth of credit and third party funds in the banking sector next year, in line with a reduction in non-performing loans (NPL)

Winny Tang (The Jakarta Post)
Jakarta
Fri, December 21, 2018

Share This Article

Change Size

OJK predicts 13 percent loan growth next year

T

span>The Financial Services Authority (OJK) has forecast an improvement in the growth of credit and third party funds in the banking sector next year, in line with a reduction in non-performing loans (NPL).

The regulator has based its predictions on satisfying banking performances toward the end of year, along with the expectation that the United States Federal Reserve will dial back plans for future rate hikes in 2019, amid a slowdown in the global economy.

As is often the case in December, many companies have taken out loans to pay taxes, pay salaries and bonuses for employees and other purposes, which is expected to drive up credit growth.

“Credit growth was quite high this year, it was 13.3 percent in October and 12.05 percent in November,” Wimboh Santoso, OJK chairman, said recently, adding that toward year-end, loan growth may stand at around 13 percent.

Heru Kristiyana, of the OJK’s banking supervisory division, said based on corporate business plans the banks have submitted to the OJK, many have displayed optimism about double-digit credit growth for 2019.

“Most banks project good credit growth, better than the previous year. I am still optimistic in the midst of existing challenges, that next year’s credit growth will reach between 12 and 13 percent,” he said.

Besides being optimistic about strong loan disbursement in the banking sector, the OJK has also forecast that third party funds could grow by at least 11 percent in 2019, despite the fact that this year’s funds growth had slowed down and bank liquidity had tightened.

As of November, the OJK recorded that banks’ third party funds only grew by 7.19 percent, while loans increased significantly by around 12 percent.

The OJK said banks would work on optimizing their digital channels to ensure higher third party funds next year.

Aside from digitalization, banks will also benefit from the implementation of the government regulation that requires exporters to repatriate their export earnings and put them in domestic banks.

Furthermore, the OJK predicts that the gross NPL ratio in 2019 will decline to 2.2 percent from 2.6 percent in November this year, because some banks have undertaken loan restructuring processes.

“Some banks have restructured their NPLs from 2014-2016, so their NPL ratios are relatively ‘clean’ now. Thus, next year the NPL ratios will decline compared with this year,” Wimboh said.

The OJK also reiterated its call on banks to consolidate either by acquisitions, merger or other corporate actions, in order to make banks in Indonesia stronger, and also so that they can be more easily supervised by the authority.

On Wednesday, the regulator gave an assurance that the merger between Bank Tabungan Pensiunan Negara (BTPN) and Bank Sumitomo Mitsui Indonesia (SMBCI) will take place soon.

“The OJK has agreed [the merger plan]. The process now is just waiting for the approval from the Financial Service Agency in Japan,” Heru said.

{

Your Opinion Matters

Share your experiences, suggestions, and any issues you've encountered on The Jakarta Post. We're here to listen.

Enter at least 30 characters
0 / 30

Thank You

Thank you for sharing your thoughts. We appreciate your feedback.