Fitch Optimistic Extended Loan Restructuring Boost Bank Profitability

Illustration (Photo: Doc. Antara)

JAKARTA - PT Fitch Ratings Indonesia welcomes the loan restructuring extension policy set by the Financial Services Authority (OJK).

Director of Fitch Ratings Indonesia Indonesia Gary Hanniffy said that the policy of extending credit restructuring set by the Financial Services Authority (OJK) would have a positive impact on the banking industry in the country.

"The policy will reduce bank pressure in the short term," he said in an official broadcast on Monday, September 6.

According to Gary, if the pressure can be reduced it can have an impact on improving business performance.

"This will improve asset quality and also increase bank profitability," he said.

However, Gary sees that credit restructuring is not a permanent solution that can be expected in the long term.

"But keep in mind that this only extends the term of a loan that has decreased in quality," he stressed.

Furthermore, Gary added that banks have enough time to rearrange the achievement targets so that business performance can be more optimal.

"This extension gives banks more time to deal with non-performing loans as the economy recovers and reduces the risk of a spike in NPLs (non-performing loans) in the second quarter of 2022. This also means that throughout 2022 banks can carry out measurable credit expansions in one full year. , "he explained.

For information, the OJK has determined that the credit restructuring will be extended until March 31, 2023. Previously, the institution led by Wimboh Santoso only planned an intermediation policy until March 2022.

“The extension of the banking stimulus policy until March 31, 2023 applies to all banks, namely Conventional Commercial Banks (BUK), Sharia Commercial Banks (BUS), Sharia Business Units (UUS), Rural Banks (BPR), and Sharia Rural Banks (BPRS). ” said OJK spokesman Sekar Putih Djarot.

Meanwhile, the value of bank credit restructuring according to the OJK until July 2021 is IDR 778.9 trillion. This amount is distributed to 5 million debtors with 71.53 percent of them being MSME debtors.

"Outstanding restructuring loans showed a decline when compared to the position at the beginning of the stimulus implementation," the OJK claims.