JAKARTA. Bank Indonesia has predicted loan growth in the banking industry to hit 12 to 14 percent next year, higher than this year’s expected 11 percent.
Bank Indonesia governor Agus Martowardojo was optimistic that the global economy would improve in 2016. Government and private investment as well as public consumption are expected to spur economic growth next year.
"The current [target of] 11 percent will increase to 12 to 14 percent next year, while third-party fund growth is expected to reach 13 to 15 percent. It will be good for Indonesia's economic growth in 2016 as funding and financing will be sufficient," said Agus after Bank Indonesia’s annual meeting in Jakarta on Tuesday.
However, he stressed the importance of financial markets deepening, to create more alternative sources of funds besides banks. "It turns out 90 percent of Indonesian financing is sourced from banks, while [financing from] the capital market is not optimal."
Meanwhile, PT Bank Mandiri president director Budi Gunadi Sadikin said the lender’s credit growth was estimated to sit below 13 percent next year, mainly driven by infrastructure loans.
"Our credit growth is targeted at 11 to 13 percent this year, hopefully we can reach 11 to 12 percent," he said.
At end of September, the Financial Services Authority (OJK) reported that bank loans had grown 11.1 percent year-on-year (yoy), totaling Rp 3,956.5 trillion. On year-to-date basis, the loans had risen 7.68 percent.
Third-party funds (DPK) in the national banks also grew 11.7 percent yoy in September to Rp 4,464.1 trillion. The net interest margin (NIM) increased from 4.21 percent in September 2014 to 5.3 percent in September 2015.
While the banks' net interest income (NII) had grown 15.69 percent yoy to Rp 479 trillion as of Sept. 31, their net profit was slashed by 8.4 percent to Rp 78.2 trillion, compared to the same period last year’s Rp 85.4 trillion.
The net profit decline occurred in all groups of banks, and was due to an increase in banks' non-performing loans (NPL), implying that more debtors were facing trouble dealing with their liabilities.
Until September, the NPL ratio was at 2.7 percent, higher than last December’s NPL ratio which stood at 2.16 percent.
