Indonesian Banking Industry Remains Stable despite Profit Drop
29 June 2015 04:44 WIB
TEMPO.CO, Jakarta - International rating agency Moody’s Investor Service announced that Indonesia has a stable banking Industry, supported with strong finance fundamental and high profitability and capital adequacy.
In a report release by Moody’s, the credit growth was predicted to stand between 15 percent and 16 percent by the end of this year, which is lower that the growth over the last few years. Moody’s also predicted that Indonesian economic growth would reach 5 percent, lower than the average growth in the period of 2010-2013.
In line with the national credit growth, the loan to deposit ratio (LDR) was predicted to remain stable. Moody’s expected that the growth of third party fund would be higher than the credit growth.
Data from the Financial Services Authority (OJK) revealed that the credit growth in April 2015 stood at 10.41 percent or Rp3,745 trillion (US$288 million), while the third party fund increased by 14.15 percent to Rp 4,217 trillion (US$324.3 billion) .
Therefore, within the next 12 to 18 months, Moody’s predicted that there would be no liquidity tightening, since the interest rates for time deposits had been limited by the OJK.
On the other hand, Moody’s predicted that the asset quality would drop, particularly for investment credit that grew rapidly during the period of 2010-2013. However, Moody’s viewed that Indonesian banking industry has high level of profitability and capital adequacy.
BISNIS.COM