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Jakarta Post

COVID-19 drives down loan growth to record low

  • Made Anthony Iswara and Riska Rahman

    The Jakarta Post

Jakarta   /   Thu, April 9 2020   /  01:38 am

Indonesia’s loan growth fell to a more than 10-year low in February as a cooling economy due to the COVID-19 pandemic hit credit demand across business sectors.

The country’s banking industry recorded a 5.93 percent loan growth in this year’s second month, the lowest expansion since November 2009, according to Financial Services Authority (OJK) data. The figure is lower than 6.1 percent booked in January.

Nonperforming loans (NPL) jumped to nearly 2.8 percent, the highest since May last year.

“The slow loan growth was caused by weak demand in line with the economic cycle, which has been slowing since 2019’s fourth quarter,” said Bank Permata economist Josua Pardede on Thursday.

“Considering that the COVID-19 pandemic will slow down the domestic economy, particularly household spending and private investment, loan growth in 2020 is estimated to co...