OJK slashes 2019 credit growth target to 9-11 percent

OJK slashes 2019 credit growth target to 9-11 percent

If it drops, it will still stay at the upper limit. Right now it still stands at double digits, or 11 percent.
Jakarta (ANTARA) - The Financial Service Authority (OJK) has revised downward its target of bank loan growth for 2019 from 9 to 11 percent year-on-year (yoy) to Rp538 trillion, owing to the impact of the US-China trade war on exports and financing needs.

"Several banks have postponed (the distribution of bank loans). The causes vary. One of them is the impact of the trade war," OJK Chief Commissioner Wimboh Santoso said at a meeting with the House of Representatives (DPR) Commission XI here on Monday night.

In response to the latest developments, OJK has revised downward its target for growth in bank loans for 2019 to 9 to 11 percent, from the earlier 10 to 12 percent.

He said the US-China tariff war has reduced the business world's optimism about demand for export commodities in trade war-affected countries.

"If exports are subjected to tariffs, exporters will automatically not be able to produce goods in large quantities. If the production is disrupted, it will affect the others," Wimboh said.

Despite the drop, he believed the growth of bank loans this year will stay at the upper level of the bank loan growth range at 11 percent.

"If it drops, it will still stay at the upper limit. Right now, it still stands at double digits, or 11 percent," Wimboh said.

The correction in the bank loan growth target is purely the result of external economic factors, rather than low demand for bank loans inside the country, he said.

OJK also has revised downward the target of third party fund growth for this year to 7 to 9 percent, from 8 to 10 percent earlier.

The decline in third party fund placement resulted from pressures leading to capital flight, he said, without elaborating on the cause of the pressures.

"But it will return again when inflow is larger. Our foreign exchange reserves are still good, standing at US$124 billion, as of May 2019," Wimboh said.

The OJK has predicted that bank loans will grow 12 to 16 percent and third party fund placement will expand 10 to 13 percent in 2020.
 

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