Beware, forex NPL of major banks may hike

JAKARTA. The fluctuation in rupiah exchange rate has led to unease among bankers, as foreign exchange (forex) denominated non-performing loans (NPLs) of several major banks have increased.

According to KONTAN’s note, the average rate of forex denominated NPLs of 10 major banks has reached the level of 4.11%. This number is approaching the 5% maximum limit for NPL, which is pegged by the regulator.

The forex denominated NPLs of 10 major banks have incrased by 86.97 bps on year on year (YoY) basis. Four banks, namely Maybank Indonesia, Bank Panin, CIMB Niaga and Bank Danamon become the banks with the highest forex denominated NPLs. The forex denominated NPLs of the major banks have exceeded the 5% limit.

The NPL rate of Maybank Indonesia stands at the level of 13.97%, or has increased by 44.57 bps on YoY basis, while the forex denominated NPL of Bank Panin has increased by 230 bps to the level of 10.12%.

According to the financial reports submitted to the stock exchange authority, commodity sector has become burdensome for the forex denominated NPLs.

President Director of Bukopin Glen Glenardi said that most of the NPLs of the bank were generated by mining sector.

Bank Danamon also claimed that most of the forex denominated NPLs of the bank were generated by mining and drilling sectors, while the forex denominated NPLs of Maybank were derived from the sectors of mining, electricity, gas, water, agriculture, forestry, transportation, warehousing, and communication.

Be selective
President Director of Bank Mandiri Kartika Wirjoatmodjo said that the increase in forex denominated NPLs was generated by the debtors of textile industry. Therefore, Bank Mandiri will be selective in providing forex denominated credits. “We are in favor of the sectors of palm and mineral mining, such as gold and chopper,” Kartika said.

Meanwhile, Director of Risk Management of Bank Mandiri Ahmad Siddik Badruddin said that the forex denominated credits contributed to Rp 77.7 trillion or 13.9% of the total credit of Bank Mandiri. The biggest ratio of forex denominated NPLs was contributed by PT Apac Inti Corpora that amounts to Rp 972.8 billion.

Economist at the Deposit Insurance Agency (LPS) Dody Arifianto predicted that rupiah rate may fluctuate along with the high uncertainty in condition abroad, especially after Donald Trump was elected as the President of the United States (US). The US dollar still has potential to appreciate in the future, especially with the plan of The Fed to raise its interest rate, said Dody. (Translator: Muhammad Farid)