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Commercial banks stick with rosy credit growth expectations
Despite an underwhelming first-half performance and restrictions imposed recently by the government to contain COVID-19, banks in the country are maintaining upbeat forecasts for 2021 credit growth.
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B
ank Indonesia (BI) has revised down its credit growth projection for this year following the enforcement of business and mobility restrictions, but commercial banks believe they can still deliver on earlier plans.
BI Governor Perry Warjiyo said Thursday that the central bank forecast growth in total loan disbursement between 4 and 6 percent this year, down from a previous forecast of 5 to 7 percent.
“Credit growth will be lower [than projected] in the third quarter of 2021, in line with the decline in economic activity due to the COVID-19 pandemic mobility restrictions, and it will pick up again in the fourth quarter,” Perry told reporters in an online briefing.
The central bank reported Friday that overall loan disbursement was estimated to have grown 0.4 percent year-on-year (yoy) to Rp 5.57 quadrillion (US$384.12 billion) in June, marking the first positive figure since September. While consumer and working capital loans continued to grow, investment loans posted a smaller contraction.
Read also: Banks expect loan disbursement to rebound this year
The expected rebound in loan disbursement is less certain now, given the recent extension of the emergency curbs until July 25. The government has made any relaxation contingent upon improvement in key COVID-19 metrics, such as the positivity rate in testing for the virus.
Publicly listed Bank Central Asia (BCA), the country’s largest private lender, has so far maintained its credit growth projection for the full year at 4 to 6 percent. In the first six months, BCA disbursed a total of Rp 593.6 trillion in credit, down 0.3 percent on the year.
For corporate loans, BCA reported growth of 1 percent yoy to Rp 260.4 trillion in the first half of the year. Consumer loans contracted overall, even though BCA’s mortgage disbursement grew nearly 3 percent from a year earlier.
“In credit growth, our expectation is not far from the range between 4 and 6 percent for this year,” BCA finance director Vera Eve Lim said in a virtual press conference on Thursday. “If things improve, I believe demand will grow quickly.”
Read also: Digital banking: BCA joins the fray with planned IPO
Similarly, publicly listed Bank Rakyat Indonesia (BRI) is sticking with its expectation for loan disbursement for this year, which the state-owned lender sees at 7 percent, though BRI spokesperson Aestika Oryza Gunarto said the bank remained open to revise that projection.
Aestika said BRI booked credit growth in the first six months, supported mainly by double-digit growth in loans for micro enterprises. BRI declined to disclose the figures ahead of its press conference in August.
“Right now, BRI still leaves room for both an upward or downward revision regarding the RBB until the end of the year, taking into account the economic situation,” Aestika told The Jakarta Post in a text message on Friday, referring to its banking business plan.
While overall credit for small businesses registered growth, loan disbursement to micro enterprises was estimated to contract 25.6 percent yoy to Rp 197.1 trillion in June. That still marks an improvement over a contraction of 27.2 percent yoy seen in May.
Sucor Sekuritas analyst Edward Lowis said credit issuance to micro enterprises was relatively vulnerable to the economic impact of the pandemic restrictions, and prolonged curbs could see the segment lag behind others in terms of credit growth.
Edward said he expected loans to grow just 2 to 4 percent this year, less optimistic than the projections from BI and commercial banks.
“This quarter is a bit challenging,” Edward told the Post in a phone interview on Friday. “Corporations are not [conducting planned] capital expenditure and consumers are holding back on spending. That is why loan demand will slightly weaken this quarter.”
