The Prospect Of Bank Business Is Considered To Be Still On Guard Even Though The Interest Tribe Continues To Rise

Illustration (Photo: Doc. Antara)

The Financial Services Authority (OJK) stated that the condition of the national banking business is quite good in dealing with the trend of increasing interest rates and the uncertainty of global financial markets ahead of 2023.

OJK Banking Supervision Chief Executive Dian Ediana Rae explained that this indication can be seen from credit growth which still recorded growth from the previous 10.6 percent year on year (yoy) in August to 11 percent in September 2022.

In addition, Dian explained that another assumption that became the basis for the projection was the sloping gross non-performing loan (NPL) ratio, as well as reserve value reduction losses (CKPN) which were getting stronger in line with the improvement in NPL.

"From this banking performance, it can be concluded that the risks faced by each manageable in the midst of rising interest rates have the potential to encourage credit risk and pressure on liquidity conditions," he said when giving a presentation in a working meeting with Commission XI of the DPR.

In terms of liquidity, OJK launched that third party funds (DPK) increased to IDR 7,647 trillion in September. This figure is higher than the August position which is known to be IDR 7,609 trillion.

The book then made the loan to deposit ratio (LDR) even more aggressive to 82.05 percent in September from 81.22 percent in August.

"Bank performance is well maintained, supported by declining credit risk, adequate liquidity to support strong lending and capital. In general, banking intermediation is relatively good with LDRs ranging from 78 percent to 92 percent," he said.

To note, the lowest interest rate trend in history has ended, marked by the Bank Indonesia (BI) decision to raise the BI rate by 25 basis points (bps) to 3.75 percent last August.

The move then continued in September with an increase of 50 bps to 4.25 percent, October up 50 bps to 5.75 percent and November which again increased 50 bps to 5.25 percent.

Just so you know, it is believed that the central bank's aggressive attitude will continue until early 2023. This is because BI's strategy to raise interest rates cannot be separated from the target of monetary authority to reduce the inflation rate below 3 percent, which is currently still at the level of 5.71 percent as of October 2022.