TEMPO.CO, Jakarta - In response to the depreciation of rupiah against the US dollar and the economic slowdown, the Financial Services Authority (OJK) asked banks to anticipate the increase in bad loans or non-performing loans (NPLs).
Irwan Lubis, OJK’s deputy commissioner for of banking supervision, said that his institution had conducted a stress test on banks by using the one-to-one variable method and the integrated methods, taking market, credit and liquidity risks into account.
Irwan said that banks would not be affected by the depreciation of the local currency. However, Irwan added, banks would be exposed by the credit risk when the NPL climbed to 25 percent.
In addition, 51 out of 54 foreign exchange banks are in the long position, reflecting higher receivables and assets than liabilities. Meanwhile, three other banks in the short position with net foreign exchange under 20 percent will be affected. However, it would only affect the banks’ profit instead of their capital.
Meanwhile, the test using a combination of second round effect showed that the rupiah depreciation would affect bank debtors.
“It will have an impact on debtors’ ability to pay their debts and decrease the loan collectability status from performing to non-performing,” he said.
In the first six month of this year, the banking industry had recorded an increase in non-performing loans. In June 2015, the gross NPL was recorded at 2.55 percent while the net NPL was 1.25 percent.