Banks to Be More Selective in Giving Loans

TEMPO.CO, Jakarta - Banks are forecasted to be more selective in giving loans this year. This is caused by the bearish economy due to global uncertainty, domestic political climate, and current account deficit.

Economist of Standard Chartered Bank, Fauzi Ichsan, said that banks must keep monitoring sectoral economic growth whether it equals or surpasses the national growth. “Mining and real estate sectors should be avoided,” he said yesterday.

The President Director of PT Bank Central Asia Tbk, Jahja Setiaatmaja, said that when bank liquidity decreases, loans must also be reduced. “If the credit growth is reduced, then the liquidity will be sufficient. Therefore, loans to be cut back include consumer and corporate credits,” he said. 

BCA predicts that credits may grow by 13.5 to 15 percent this year, or lower than last year’s growth, which was 22-23 percent. “We will not provide loans for new customers. But we will meet current customers’ needs,” he said.

Earlier, Bank Indonesia Governor Agus Martowardojo suggested banks to suppress their loans this year to grow only by 15-17 percent. In line with the suggestion, the central bank will also promote composition bank loans, particularly to productive export-oriented sectors, which provide imports of substitute products and promote an increase in economic capacity.

Meanwhile, the President Director of PT Bank Negara Indonesia Tbk, Gatot Suwondo, stated that the company will focus on financing eight major industrial and consumer sectors. “Despite slow pace, the industrial sector will grow. We also view the industrial sector financing in the long run,” he said.

The deceleration trend is reflected in Bank Indonesia’s report of bank loans last November. The domestic economic slowdown will affect credit lending for production. It is reflected by the slow growth of loans in processing and trading sectors, as well as the hospitality sector that declines to Rp 1,226 trillion.

Based on the type of utilization, the slowdown in the growth in consumer credit, which was 16.7 percent in October 2013 to 15.4 percent in November 2013. “Meanwhile, capital and investment loans grow steadily,” as quoted from BI release.

As purchasing power declines, loans in the property sector, which make up 14.5 percent of bank loans, are also slowing down. Property loans in November 2013 reached Rp469.9 trillion and achieved 26.9 percent growth. The figure is lower than October 2013's growth, which was 29.4 percent.