Head Of DK LPS Calls Economic Improvement, Affects Banking Industry Performance

Chairman of the LPS Board of Commissioners Purbaya Yudhi Sadewa. (Photo: ANTARA)

JAKARTA - Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadewa said the banking industry continues to show performance in line with the improving condition of the Indonesian economy.

“This is supported by solid capital and ample liquidity. As of April 2022, Third Party Funds (DPK) grew by 10.11 percent YoY and loans grew by 9.10 percent YoY," said Purbaya in a statement quoted on Thursday, June 9.

Banking capital during the pandemic is still solid with a CAR ratio as of April 2022 reaching 24.32 percent.

In terms of risk, the ratio of gross non-performing loans (NPL) also shows an improvement from conditions during the pandemic which had increased by more than 3 percent, where as of April 2022, gross NPL was at the level of 3.00 percent.

"The condition of strong banking fundamentals cannot be separated from the synergy within the KSSK in creating a policy mix that keeps the banking industry stable," he added.

Regarding deposit interest rates and credit interest rates, he explained, from February 2021 to May 2022, in line with the policy of reducing the guarantee interest rate, the 1 and 3 month deposit rates were observed to continue to decline even though the decline was slowing down.

This, continued Purbaya, contributed to the reduction in the cost of funds for banks, thus supporting the reduction in loan interest rates.

"The downward trend in the guarantee interest rate is in line with the downward trend in the central bank's benchmark interest rate. In its policy, LPS continues to synergize with the central bank as the monetary policy authority to support the national economic recovery. The development of loose liquidity provides sufficient space for banks to manage costs. funds or deposit interest rates at a low level," he explained.

When compared to several Southeast Asian countries, credit interest rates in Indonesia are still the highest.

This indicates that there is room for improvement in the banking structure in Indonesia in order to operate more efficiently.