JAKARTA. Let’s forget the single credit target, as the banks are likely to struggle to meet this government’s target.
This condition might have been driven by some factors, namely the increase in the benchmark interest rate, banking liquidity, inflation rate rise, and The Fed’s rate rise, which is predicted to take place in March.
According to the Central Statistic Agency (BPS), the inflation rate in January 2017 stood at the level of 0.97%, higher than 0.6%-0.7%, which was predicted by the economists. The inflation rate is predicted to continuously increase due to the high food price.
Bankers even predicted that the credit rate is unlikely to drop, despite the inflation rate decreases. “Some risks related to the banking’s liquidity will be the main concern,” said the President Director of PT Bank Central Asia Tbk (BCA) Jahja Setiaatmadja.
In this case, the banks, which have allocated the credits to infrastructure sector in a significant number, may face liquidity risks.
Director of Treasury & Capital Market PT Bank CIMB Niaga Tbk John Simon said that aside of infrastructure credit the plan for issuing the government’s bonds as much as Rp 400 trillion may attract bank’s liquidity. Meanwhile, President Director of Bank BukopinGlen Glenardi said that the credit rate will be affected by the cost funds.
In referring to the last data of 2015, banks’ liquidity rate or loan to deposit ratio (LDR) has been at 93%. Liquidity risks may take place if this condition is not managed properly. The banks to remain hunting liquidity by increasing deposit interest, despite the inflation is maintained. Let alone, The Fed will increase the interest rate at the range of 50-75 bps.
Nevertheless, Executive Director of Monetary Management at Bank Indonesia (the Central Bank) Dody Zulverdi said that the bank liquidity will not be troubled at the early of 2017. This reflects on the low banks’ demands on BI’s open market operations, which aim at covering the minimum liquidity. The decrease in the weighted average interest of the Government Bonds repo with two-week tenors from 4.95% to 4.92% implies the low demands on BI’s open market operations.
Senior economist at Senior Standard Chartered Aldian Taloputra reminds the importance of maintaining inflation rate to control the banks’ costs. “Because, the deposits rate is in line with the inflation rate,” he told KONTAN, Tuesday (7/2).
He predicts that the inflation rate will increase from 3.02% in 2016 to 4.3% in this year. (Muhammad Farid/Translator)
