Pandemic Makes Banking Sluggish, The Financial Services Authority Calls Low Credit Growth In February 2021

JAKARTA - Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Wimboh Santoso said credit growth was still at a contractionary level until February 2021.

According to Wimboh, during the Stakeholder Meeting for National Economic Recovery, credit growth in February 2021 was still minus 2.15 percent on an annual basis (year on year/yoy) or deeper than January 2021 which was minus 1.92 percent (yoy).

"For the credit, the growth is still minus 2 percent in February 2021 because 200 large debtors have decreased their credit balance (debit balance)", he said, quoted from Antara, Thursday, March 25.

The decline in financing from large bank debtors was due to the lowering of working capital needs when compared to working capital needs before the COVID-19 pandemic.

However, Wimboh believes that the weakening will soon recover, along with the continuing improvement in the COVID-19 pandemic conditions in the country in line with the ongoing COVID-19 vaccination program.

"We see that there are 200 large debtors whose credit balance has decreased because their working capital does not need as much as before COVID-19. But this is not a problem, later if demand increases, they will need more working capital", he said.

On the other hand, Wimboh sees credit growth starting to improve in the state-owned banks and regional development banks (BPD). However, the situation reversed with the condition of credit growth at private commercial banks and also foreign banks.

"Why is that? We will look at it in detail, even debtors per debtor of course. Why is this like that?", said Wimboh.

Wimboh is still optimistic that bank credit growth is still in line with the Bank's Business Plan (RBB) this year of 7.5 percent plus-minus 1 percent. Credit growth at the midpoint of 7.5 percent is believed to be able to boost economic growth according to the government's target of around 5 percent.

"We see that liquidity is not a problem. NPL (non-performing loan ratio) is also still under control, and we can grow better in 2021", he said.