JAKARTA - Research on Liquidity Indicators published by the Deposit Insurance Corporation (LPS) for the April 2022 period stated that banks will continue to build larger reserves in order to anticipate the deterioration of credit quality.
"Banks will still be very selective in lending by paying attention to credit risk management and the performance of prospective debtors," wrote LPS in the April 2022 Liquidity Indicator, quoted by Antara, Saturday, April 30.
LPS has a projection (outlook) that bank lending will continue to increase, but gradually, and depends on the recovery of the domestic economy.
Debtors will start to dare to apply for credit. On the other hand, this poses a challenge for banks to manage liquidity and implement fundraising strategies.
Banks are also said to have to anticipate changes in depositor behavior due to the presence of digital financial services that can affect the competitive landscape between banks.
According to LPS, until February 2022, bank lending continues to have a positive trend to grow 6.33 percent (yoy) in February 2022.
Credit demand continued to improve in line with increasing corporate and household activities.
At the same time, increased business activity encouraged the growth of third party funds (DPK) which tended to slow down to 11.11 percent (yoy) in February 2022.
Nevertheless, overall banking liquidity conditions were observed to be loose.
"This is indicated by the LDR ratio which is at the level of 77.55 percent, AL/NCD 147.33 percent and AL/DPK 32.72 percent, slightly decreased compared to the previous month," wrote LPS.
LPS also estimates that the condition of bank liquidity and capacity in lending will not be significantly affected by the policy plan to increase the minimum statutory reserve requirement (GWM) which began in March 2022.
"Nevertheless, it is still necessary to pay attention to the effects of these policy changes on individual bank liquidity management strategies and trends in deposit interest rates," according to LPS.
On March 1, 2022, Bank Indonesia increased the statutory reserve requirement for conventional commercial banks by 1.5 percent to 5.0 percent with the full fulfillment on average.
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