OJK Optimistic Banking Business In The Second Quarter Of 2024 Increases Amid Global Uncertainty

Illustration. (Photo: Doc. Antara)

JAKARTA - The OJK Banking Business Orientation Survey (SBPO) in the second quarter of 2024 involving 95 respondents' banks shows that they are increasingly optimistic that banking performance will improve in the second quarter of 2024.

Meanwhile, based on data from March 2024, the total assets of 95 banks reached 94.67 percent of the total assets of commercial banks.

Head of the Department of Literacy, Financial and Communication Inclusion of OJK Aman Santosa conveyed that banking optimism was reflected in the Banking Business Orientation Index (IBP) in the second quarter of 2024 which was recorded at 58 or in the optimistic zone.

"This optimism is driven by expectations that the increasing function of banking intermediation is accompanied by banking ability to manage the risks faced even with less conducive global macroeconomic conditions," he explained in his statement, Wednesday, May 29.

The uncertainty of global macroeconomic conditions caused the Macroeconomic Condition Expectation Index (IKM) in the second quarter of 2024 to remain at a pessimistic level of 31, mainly due to estimates of an increase in the BI Rate, a weakening of the exchange rate and an increase in inflation.

However, Aman said that in the midst of the estimated macroeconomic condition, GDP is expected to continue to grow driven by public consumption which is expected to increase after the month of Ramadan in line with the distribution of holiday allowances for Eid al-Fitr celebrations and the existence of many holidays in the second quarter of 2024.

"Although the macroeconomic condition is estimated to be less conducive, the majority of respondents believe that the risk of banking in the second quarter of 2024 is still maintained and under control," he said.

It is safe to convey this can be seen from the Risk Perception Index (IPR) of 59 (the confidence zone that the risk is quite manageable, along with the belief that credit risk and market risk are maintained.

In addition, Aman said respondents believed that the quality of credit remained good, PDN was at a low level and was in a long position, and inability would still increase along with the increase in lending. Furthermore, the risk of liquidity is also estimated to be stable compared to the previous quarter.

According to Aman, expectations of banking performance in the second quarter of 2024 are also optimistic about the Performance Expectation Index (IEK) of 83.

"The banking performance optimism is driven by expectations that the funding side (DPK) will still be able to support the increase in lending which has an impact on increasing banking profit and capital," he explained.

It is safe to convey optimism that the increase in credit growth in the second quarter of 2024 was driven by expectations of improving domestic economic growth after the 2024 General Election, the momentum of Eid al-Fitr and the number of holidays from April to June which increased public consumption, and maintained people's purchasing power.

Meanwhile, in terms of raising funds, respondents estimate that in the second quarter of 2024, DPK will also grow in line with improving economic activities, bank businesses will obtain sources of funds to support credit growth, and government funds that will enter local banks.

Aman conveyed to SBPO, OJK also collected information regarding the prospect of distributing Motor Vehicle Loans (KKB) in the future which is believed to still grow even though it had slowed down in early 2024 because it was influenced by uncertain political situations, thus making customers tend to wait and see and refrain from buying motorized vehicles.

According to Aman, the thing that underlies the majority belief that the prospect of KKB growth in the future is quite high, among others, is because the potential of the automotive market in Indonesia, which is still very large, is supported by high economic growth.

"This is believed to encourage an increase in public consumption, which will also have an impact on the sale of motorized vehicles," he said.

Furthermore, Aman conveyed that from the survey results, information was also obtained regarding the impact of the problems in the Property and Real Estate sector in several countries for banks in Indonesia, which it is believed will not have a significant impact, both direct and indirect.

"The real estate and property industry in Indonesia in 2024 is also believed to be growing positively in line with maintained demand amid improvements in purchasing power," he concluded.