TEMPO.CO, Jakarta - The Financial Services Authority (OJK) said that the national banking industry remains controlled despite the economic pressures and the rupiah depreciation looming over Indonesia's financial sector.
OJK board of commissioners' chairman Muliaman D. Hadad said Indonesian banks are under control, as indicated by several financial indicators, including the relatively small net open position (NOP) of 2.44 percent, which is far below the alert level of 20 percent.
Local banks' capital adequacy ratio (CAR) is also relatively safe at 20.28 percent for in the first semester, while the liquidity tool-to-non-core deposits (NCD) ratio is still at by 80-94 percent.
"The CAR and the NCD are still above the set threshold. Our banks can withstand shock risks," Hadad said at the Finance Ministry building on Thursday, August 13.
Banks' stability is also reflected by the securities owned, which are mostly held to maturity as they are not placed on trading and non-trading accounts.
Nevertheless, Hadad said the regulator will continue to monitor market risks to maintain banking performances, particularly against risks non-performing loans (NPLs).
In the first semester this year, the banking industry's gross NPL stood at 2.45 percent, while the net NPL was 1.25 percent.
Therefore, banks need to prepare impairment loss backups (CKPN) that would be enough to support the industry in the event of credit crunches.
"Banks have provided sufficient impairment loss allocation. We hope that the NPL rate will not escalate," Hadad said.
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