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Jakarta Post

Banks taking cautious approach amid fears of rising bad debts

  • Riska Rahman

    The Jakarta Post

Jakarta   /   Mon, February 24, 2020   /  05:48 pm
The Jakarta Post Image
Money counts: A teller counts money at a Mandiri Sharia Bank branch office in Menteng, Central Jakarta. (Antara/Audy Alwi)

Banks are taking a more cautious approach in providing new loans amid fears that the worse-than-expected economic conditions will cause an increase in bad debts. State-owned lender Bank Tabungan Negara (BTN), for example, is reducing its loans for high-rise commercial buildings this year as a result of a rising non-performing loan (NPL) ratio in the sector. The bank’s president director, Pahala Mansury, said the cautious step was taken because of the rising trend in NPLs in the commercial building sector, such as apartments. According to him, NPLs in the commercial buildings sector significantly increased to 18 percent of the total loans disbursed in the sector, amounting to Rp 21.66 trillion (US$1.6 billion) caused by sluggish apartment sales As a result, BTN’s gross NPL ratio skyrocketed from 2.8 percent in 2018 to 4.78 percent last year, nearing the unhealthy...