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Jakarta Post

Banks warned of tight liquidity, surge in bad loans in 2020

  • Riska Rahman

    The Jakarta Post

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Jakarta   /   Mon, January 6, 2020   /  08:38 am
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A liquidity problem will likely continue to haunt local banks, especially small and medium lenders in 2020 as many will invest their money in the government’s high-yield bonds instead of making deposits in banks, analysts have said.(Shutterstock/File)

A liquidity problem will likely continue to haunt local banks, especially small and medium lenders in 2020 as many will invest their money in the government’s high-yield bonds instead of making deposits in banks, analysts have said. Despite complaints from the banking sector, the government is expected to continue its strategy of issuing high-yield bonds to balance out a deficit in the state budget. Bank Mandiri chief economist Andry Asmoro said on Dec. 19 that the liquidity problem would continue because of a lack of funding sources in the local banking industry. He said that tight liquidity was reflected in the Banking Industry Update in August 2019, which indicated that loans grew only by 8.6 percent year-on-year (yoy), lower than 9.6 percent recorded in July 2019, while the growth of third-party funds or deposits also slowed to 7.6 percent from 8 percent in the same pe...