Demand for banking loans slows down in Q1

Jakarta (ANTARA News) - Demand for banking loans in Indonesia in the first quarter of 2017 fell significantly, according to the results of a survey conducted by Bank Indonesia (BI).

The weighted net balance (SBT) in the survey showed applications for bank loans in the first quarter of 2017 plunged to 52.98 percent from 85.6 percent in the fourth quarter of 2016.

"The low demand from the business world and households for financing is the main factor of slow credit growth in the first quarter of 2017," Executive Director of Communication Department of Bank Indonesia Tirta Segara said here on Thursday.

He said low credit growth was recorded in all consumption sectors, with the weighted net balance of working capital credits falling to 51.9 percent from 84.2 percent, that of investment credits declining to 65.9 percent from 69 percent, and that of consumption credit going down to 40.5 percent.

Banking respondents believed applications for banking loans will recover in the second quarter, with the weighted net balance projected to jump to 98.5 percent.

"The projected increase in the amount of credits distributed will be fueled by the expectation of better economic condition, the declining risk of distributing credits and banks plan to cut lending interest," he said.

In line with the projection of rising credit growth in the second quarter of 2017, he said the banking survey also indicates that credit growth for all of 2017 is expected to increase slightly to 13.2 percent year-on-year from 13.1 percent based on the result of a survey conducted in the fourth quarter of 2016.(*)