TEMPO.CO, Jakarta - The Financial Services Authority (OJK) lowered its bank performance target to 9-11 percent from an initial projection of 10-12 percent. Third party funds (TPF) target is also corrected from 8-10 percent to 7-9 percent.

In terms of value, loan growth target is corrected from Rp559 trillion to Rp538 trillion, while TPF projection is lowered from Rp414 trillion to Rp482 trillion.

OJK chief Wimboh Santoso said the target cut was not based on low credit demand, but more due to external factors, "one of them being the trade war impact," he told Tempo on Tuesday, June 18.

He added that the target correction was made after observing a number of banks' business plan change in mid-year.

Bank Mayapada International's president director Hariyono Tjahjarijadi confirmed that trade war between the US and China has significant impacts on banks' performance. "The economies of countries are globally affected, causing domestic businesses to weaken—including in Indonesia," Hariyono told Tempo.

This condition causes the real sector to hold back from expanding, while corporates' demand for loans decline.

Center of Reform on Economics Indonesia economist Piter Abdullah said that lowering credit growth target has become inevitable especially for banks experiencing liquidity difficulties. "That's the most rational response," he said.

He estimated that overall credit growth would still reach the upper limit of 11 percent, especially if supported by a more relaxed monetary relaxation policy. "If Bank Indonesia opts for friendly policies, such as lowering the benchmark interest rate in the second semester, the growth may even reach 11-12 percent," Piter said.

HENDARTYO HANGGI | GHOIDA RAHMAH