BCA, Mandiri loans grow above industry average

JAKARTA. PT Bank Central Asia (BBCA), Indonesia’s largest lender by market value and No. 1 private bank in the country, saw its lending grow by more than 41 percent in June from a year earlier, but expects the trend to slow by the end of this year, according to a top executive.

The nation’s largest bank by assets, state-owned PT Bank Mandiri (BMRI), also booked high loan growth of above 28 percent at the end of the first half versus the same period last year, due to soaring demand from its micro customers as well as small and medium enterprises (SMEs).

Commercial banks in the country grew lending by an average of almost 28 percent in June, compared with 24.5 percent at the end of last year. Bank Indonesia (BI) Governor Darmin Nasution brushed off concerns of overheating, saying that the credit growth is mainly for productive investment purposes and therefore would support the country’s overall economic growth.

“Generally, loan growth is quite high. But there may be a little bit of a slow down in the second half of this year. Therefore, we do not revise our lending target at Rp 245 trillion (US$25.97 billion) at the end of this year,” BCA chief executive officer (CEO) Jahja Setiaatmadja told The Jakarta Post over the weekend.

BCA targeted its lending to grow 21.3 percent this year from an outstanding of Rp 202 trillion last year. As of June, the bank has Rp 226 trillion loans outstanding, Jahja said, meaning that BCA has disbursed Rp 24 trillion credit so far this year, representing a 11 percent growth year-to-date.

BCA, which has seen aggressive growth in consumer loans, has anticipated a drop in its automotive and housing loans by below 10 percent this year after an implementation of tighter down payment requirement on mortgage and automotive credits for banks and multifinancing.

Meanwhile, Bank Mandiri has been seeing a sharp increase in micro lending, having jumped 70 percent in June this year from a year earlier, chief financial officer (CFO) Pahala N. Mansury told the Post.

“The quality of the assets [credit] also remained manageable,” Pahala said without disclosing the non-performing loan (NPL) ratio, which reflects the number of a bank’s bad loans in comparison to its overall outstanding loans.

Commercial banks’ average NPL remained manageable at below BI’s 5 percent threshold as of June this year, governor Darmin has said.

“Banking system stability remains manageable, followed by increasing intermediary function in support of financing economic activities in the country,” BI said in a recent note.

High growth in bank lending shows that the domestic economy remains robust in Southeast Asia’s largest economy, which relies heavily on domestic consumption, amidst an export slowdown that pressures national economic growth against the backdrop of weakening global demand.

“Concern over a deteriorating domestic economy may be overstated, as domestic demand — for example, consumption and investment — is still holding up. This is also reflected in the stronger pace of credit growth by 26.3 percent year-on-year in May, with investment credit dominating growth,” Bank Danamon economists Dian Ayu Yustina and Anton Gunawan wrote.

Indonesia’s economy may grow between 6.1 and 6.5 percent this year, according to central bank and government estimates.

International Monetary Fund chief Christine Lagarde, during her recent visit, and the World Bank’s (WB) quarterly report, however, warned Indonesia that the crisis in Europe might dampen demand, thus slowing the country’s growth.

In its reports the WB cut its annual economic growth forecast for Indonesia to 6 percent this year and to 6.4 percent for 2013, assuming the current global economic slowdown would continue.

However, the growth rate might drop to as low as 3.8 percent in a worst-case scenario of a severe global downturn, the report said. (Esther Samboh/ The Jakarta Post)