No Need To Worry, Indonesia's Banking Industry Is Stable Against US And European Shocks

Chairman of LPS Purbaya Sadive (Photo: Doc. Antara)

JAKARTA - The Deposit Insurance Corporation (LPS) assesses that the domestic banking industry remains stable amid the shocks that occurred in the United States (US) and Europe.

Chairman of the Board of Commissioners of the Deposit Insurance Corporation (LPS) Purbaya Yudhi Sadewa assessed that the domestic banking industry also has strong resilience after the shock of the banking industry.

"Industrial actors don't actually need to be too anxious because our economic condition is quite resilient to external turmoil," Purbaya said, quoting Antara.

However, Purbaya reminded the national banking industry to continue to anticipate various economic uncertainties by maintaining capital at a healthy level. He appealed to banking industry players to see various sectors that have great opportunities so that financing from banks can be channeled.

Macro, said Purbaya, Indonesia's economy is also stable and has resilience because it is supported by domestic consumption.

Currently, said Purbaya, the ratio of domestic banking non-performing loans (NPL) is at a healthy level, namely 2.59 percent (gross) as of January 2023, and the banking capital capacity or (Capital Adequacy Ratio/CAR) reaches 25.93 percent.

Likewise with the current banking liquidity, he said, is in adequate condition. Liquid/non-core deposit (AL/NCD) equipment and third party liquid/funds (AL/DPK) as of January 2023 were 129.64 percent and 29.13 percent, respectively.

Purbaya appealed to the public to continue to believe in national banking and not be afraid to start investing even though there is potential for recession in several large countries.

"People must also remain calm regarding their savings because the current LPS assets are more than Rp. 196 trillion. So don't be afraid to save, because LPS funds are sufficient to guarantee public savings," said Purbaya.

As of February 28, 2023, LPS' total assets reached IDR 196.68 trillion. This position represents an increase of 5.32 percent year-on-year (Year To Date/YTD) compared to the position at the end of 2022, or an increase of 15.07 percent on an annual basis (Year on Year/YOY).

In 2023, LPS targets the asset position to reach more than Rp200 trillion in order to continue to strengthen LPS capacity in carrying out effective bank management.

The shock of banking in the US emerged after the Silicon Valley Bank (SVB) that centralized the financing portfolio at startups and venture capital companies. Prior to SVB, the bank's failure also hit the Silvergate Bank and Signature Bank.

After the banking crisis in the US, it was revealed that a number of banks in Europe also had financial health problems. Banking giant Credit Suisse has finally had to be acquired by UBS. Recently, Deutsche Bank's shares also plummeted after the risk of default increased.