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NPL

NPLs burden banks’ profits

Friday, 17 February 2017 | Dessy Rosalina, Galvan Yudistira, Yuwono Triatmodjo

JAKARTA. The bankers are advised to not massively allocate credits to commodity sector, despite the price of commodity has started increasing. As of the end of last year, the performance of banking sector had been shadowed by the significant number of non-performing loans, mainly from commodity sector.

The latest data of OJK (Financial Service Authority or FSA), the NPL rate of mining and digging hit the level of 7.37% as of November 2016. This was the highest NPL rate among all sectors. This number has jumped from the level of 4.2% from the end of 2015. The NPL rate in mining sector in 2016 had exceeded the safe level set by the OJK maximum at the level of 5%.

The number of NPLs in mining sector consist of Rp 9.40 trillion of the total allocated credit as much as Rp 127.5 trillion.

Unavoidably, the high amount of non-performing loan in commodity sector has deteriorated the banks’ profits. For an example, Bank Permata has to allocate as much as Rp 922.74 billion as the allowance for impairment loss for the non-performing loans in mining sector that amounted to Rp 1.11 trillion in 2016.

Last year, the NPL rate of the non-state owned enterprise corporate credits of Bank Rakyat Indonesia (BRI) has increased to the level of 5.6%. In 2016, BRI allocated as much as 43.32% of the total non-state owned enterprise corporate credits, which amounted to Rp 84.1 trillion, to the agricultural sector. Thus, BRI has restructured about Rp 6.9 trillion credits in corporate segment in the same year.

Meanwhile, Bank Negara Indonesia has restructured about Rp 10.7 trillion of non-performing loans (NPL). The NPL of plantation and mining sectors contributed to 15.1% and 9.2% of the total NPL, respectively.

Furthermore, the allowance for impairment loss of BNI had increased from Rp 11.67 trillion in 2015 to Rp 16.12 trillion in 2016. Nevertheless, fortunately, the net profits of BNI grew by 25.1% on year on year basis to Rp 11.34 trillion.

Another state owned bank BRI has to allocate as much as Rp 13.79 trillion provisions in the last year. As the consequence, BRI profits only increased by 3.2% to Rp 26.23 trillion.

However, the fluctuating commodities prices do not discourage the banks to increase the credit portions to commodity sector. “Bukopin will allocate more credits to commodity (sector),” said the Directot of Business and IT Developments of Bukopin, Adhi Brahmantya, Thursday (16/2).

However, OJK claimed that the NPL rate will decrease following the improvements in economy and commodity price.

(Muhammad Farid/ Translator)

Reporter: Dessy Rosalina, Galvan Yudistira, Yuwono Triatmodjo
Editor: Dupla KS
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