Indonesia February Loan Growth Slows to Decade low
(6 April 2020 – Indonesia) Indonesia’s loan growth fell from 6.1 percent in January to 5.9 percent in February, official Financial Services Authority (OJK) data showed. It is the slowest business credit growth since November 2009.
Non-performing loans (NPL) soared to nearly 2.8 percent, the highest since May 2019. The OJK and Bank Indonesia were previously targeting around 11 percent loan growth this year. But the central bank recently slashed its projection to between six percent and eight percent. Bank Mandiri president director Royke Tumilaar also said that the country’s second-largest bank by asset value would revise its loan growth. However, he expressed hope that the bank could still maintain collectability and keep NPL in check following a new OJK regulation that eases bank loan restructuring.
The six hardest hit sectors by the coronavirus pandemic include the transportation, warehousing and communication sector; accommodation, food and beverage; wholesale and retail trade; agriculture, plantation and forestry; mining and processing industry.
“The slow loan growth was caused by weak demand in line with the economic cycle, which has been slowing since 2019’s fourth quarter,” Bank Permata economist Josua Pardede said. “Considering that the Covid-19 pandemic will slow down the domestic economy, particularly household spending and private investment, loan growth in 2020 is estimated to continue to be weak,” he added.
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