The Financial Services Authority (OJK) revised down the loan growth to only 4% this year, far from the initial estimate of 11% compared to 2019. The revision is based on the development of credit realization in recent months and changes in business plans from the national banks.
According to the chairman, Wimboh Santoso, the distribution of credit was hampered by the COVID-19 pandemic and reflected in bank credit growth in May, which only grew 3.04% in annual basis or slowed compared to the previous month at around 5.73%.
Even though it is slowing down, he is optimistic that bank loans will gradually improve and start to normal again at the beginning of 2021. He notes that the banking risk profile in March 2020 is still maintained at a controlled level with a non performing loan ratio of 2.77% and net 0.98%.
Santoso was optimistic that banks’ bad loans could still be maintained in the range of under 3% inline with the implementation of the debt restructuring. Based on OJK data, the condition of the bank’ capital adequacy ratio until May 2020 also remained safe at 22.14%.