Tag: LPS

Banking: Liquidity Issue

Indonesia’s Deposit Insurance Agency (LPS) recorded that loan to deposit ratio (LDR) of the banking industry reached 93.11% per July 2018, higher than 89.20% in the previous month, reflecting a tightening of liquidity. This would prompt big scale banks and medium scale banks to raise their special rates on deposit and attract depositors.

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Upside Trend in Rates

Global interest rates are now on the upside trends. The U.S. Federal Reserve last week (June 13) raised the target range for the federal funds rate (FFR) by a quarter point to 1.75-2.00%, as widely expected, saying that the labor market continued to strengthen and that economic activity had been rising at a solid rate. Policymakers projected two additional hikes by the end of this year.

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Banking Update

The central bank (Bank Indonesia/BI) reported that the lending in 2017 grew 8.2% year on year (y/y) to Rp4,763.2 trillion. Compared to November (month-on-month), it increased 7.4% in Dec. Third party funds, meanwhile, slowed as it grew 8.3% y/y to Rp5,141.5 trillion compared to 9.1% growth in November.

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Banking Update

The Deposit Insurance Agency (LPS) said that the trend of declining lending rates will continue until May this year, but then the pressure will derive from the hike of global interest rates—the Fed is predicted to raise its benchmark rates in March, June, and September this year.

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Banking: Improved Lending

The central bank (Bank Indonesia/BI) reported on Tuesday (Oct 31) that the banks’ lending grew 9.4% to Rp4,569.9 trillion year on year (y/y) in September this year. It improved from 8.4% growth y/y in August. Lending interest also continues to decline as reflected in the ongoing transmission of monetary policy softening. In September, the average lending rates reached 11.6%.

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Banking Update: Growing NPL

The Financial Services Authority (OJK) reported on Wednesday (Sept 14) that the growing non performing loan (NPL) remained a trend, as per July the banking NPL reached 3.18%, higher than 3.05% in the previous month and 3.11% in May.

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