LPS Calls Banking Industry Performance Improved In 2022, What Are The Indicators?

Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadive. (Photo: Doc. Antara)

JAKARTA - Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadive said the performance of the banking industry will continue to grow and improve throughout 2022.

"The banking industry's performance continues to grow and improve throughout 2022, both in terms of capital, liquidity and financial intermediation," Purbaya said in a virtual press conference in Jakarta, quoted from Antara, Friday, January 27.

Purbaya said the fundamental condition of banking was relatively strong, which was shown by the industry's capital ratio (KPMM) which was maintained at the level of 25.43 percent in the period December 2022.

Meanwhile, liquidity also remains sufficient with a ratio of liquid assets to non-coste deposits (AL/NCD) at the level of 137.69 percent and a ratio of liquid assets to third party funds (AL/DPK) of 31.20 percent.

He further said that the intermediation performance of finance also continued to improve. In December 2022, bank credit grew by 11.35 percent compared to the same period the previous year (yoy), while third party funds (DPK) grew by 9.01 percent (yoy).

The recovery in intermediation performance was also followed by continued improvement in the aspect of credit management. The Gross Non Performing Loan (NPL) ratio or non-performing loans in the period December 2022 was at a controlled level of 2.44 percent. Meanwhile, the Loan at Risk ratio of banks or credit is at risk of continuing to decline to the level of 14.05 percent.

Meanwhile, the development of deposit market interest rates (SBP) for rupiah deposits was observed to increase by 11 basis points (bps) to 2.95 percent during the observation period from December 20, 2022 to January 16, 2023, compared to the period of determination at any time in December 2022.

This shows that banks are gradually responding to the increase in the central bank's benchmark interest rate (BI7DRR).

However, liquidity conditions that are still relatively loose potential affect the speed at which banks respond to the increase in BI7DRR.

Meanwhile, the SBP of foreign exchange deposits in the same observation period was observed to increase by 11 bps to 1.48 percent when compared to the determination period at any time in December 2022.

The increase in the foreign exchange SBP continues in line with the trend of the central bank's (US) interest rate policy, the Fed, which is still increasing to tackle global inflationary turmoil, particularly in developed countries.

LPS guarantees that every bank customer deposit account in Indonesia is up to IDR 2 billion per customer per bank. Until now, the coverage of banking deposits by LPS is maintained at a very adequate level.

The amount of deposits guaranteed by LPS is IDR 2 billion per customer per bank, equivalent to 32.1 times Gross Domestic Product (GDP) per national capita in 2021.

This ratio is far above the average middle and upper income countries which amounted to 6.3 times GDP per capita, and lower-middle income countries which amounted to 11.3 times GDP per capita.

Furthermore, based on data from December 2022, the number of commercial bank customer accounts guaranteed by all deposits, namely deposits of up to IDR 2 billion, is 99.93 percent of the total accounts or equivalent to 508.2 million accounts.

Meanwhile, in public credit banks (BPR) and BPR sharia BPR/BPRS based on data in November 2022, the number of accounts guaranteed by all of its deposits is 99.98 percent of the total account or equivalent to 15.1 million accounts.