Banking Sector Credit Growth Is Predicted To Be Stable Up To 12 Percent

JAKARTA - Chief Economist Mirae Asset Sekuritas Indonesia Rully Arya Wisnubroto is optimistic that the banking sector will continue to grow because credit growth in the banking sector will continue to grow high, it will still be in line with BI's projections which are in the range of 10 percent to 12 percent.

According to Rully, the growth of Third Party Funds (DPK) began to improve in the months in January and February, respectively by 5.8 percent on an annual basis or year on year (yoy) and 5.7 percent (yoy), after the last three months in 2023 grew below 4 percent (yoy).

"The credit ratio for deposits (loan to deposit ratios/LDRs is also still relatively well maintained below 85 percent, and with a non-current credit rate (NPL) which is also still low, space for increasing credit growth is also still open," said Rully in Media Day : April by Mirae Asset Sekuritas, Tuesday, April 23.

Rully said that this condition was the result of a pro-growth government macroprudential policy. So that credit growth in January 2024 was recorded to be quite high reaching 11.8 percent (yoy), the highest in almost 5 years.

The credit growth in February 2024 was slightly lower but was relatively high at 11.3 percent (yoy). Gross NPL in the same period remained low, which was 2.35 percent.

He said, with a loose macroprudential policy accompanied by adequate liquidity, credit growth will still be strong and support Indonesia's economic growth even in the midst of various challenges throughout 2024.

According to Rully, there are several risks that must be mitigated in the future so that the stability of the financial sector is maintained, namely in the banking sector, which must be more careful in channeling credit considering that the policy of restructuring bank credit for the impact of COVID-19 has ended.

In addition, currently, the Loan at Risk (LaR) of banking is still quite high, namely 11.56 percent as of February 2024.

Meanwhile, apart from banking, Rully assessed that the current condition of the Indonesian economy is still faced with many challenges, one of which is the current biggest challenge, namely the high pressure on the rupiah exchange rate.

Rully said that the movement of the rupiah in the medium term is still very difficult to predict because it is strongly influenced by global issues, not influenced by domestic conditions.

According to Rully, the trend of weakening the rupiah was due to higher-for-longer sentiment in the Fed's policy interest rate which again caused volatility and uncertainty in the global market.

"This global sentiment, which also has an impact on the large flow of foreign capital out of Indonesia, makes it difficult for BI to relax monetary policy in the near future," he concluded.