If we look at June, it (bank credit growth data) will definitely go down, because economic activity still did not move and only started in July
Jakarta (ANTARA) - Data for June, 2020 will show a slump in bank lending as economic activity is yet to recover to its full potential, Wimboh Santoso, chairman of the Board of Commissioners, Financial Services Authority (OJK), has predicted.

“If we look at June, it (bank credit growth data) will definitely go down, because economic activity still did not move and only started in July,” Wimboh Santoso said during an online discussion in Jakarta on Thursday.

Wimboh said bank credit growth for May this year was just 3.04 percent (yoy), and had slowed compared to April, when the figure was pegged at 5.73 percent (yoy).

"Credit growth (in May, 2020) only dropped to around 3 percent, whereas at the end of last year it was at 6 percent," he said.

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According to him, new bank credit growth will see an improvement in July, 2020 with community activities returning to normal.

Therefore, Wimboh estimated, bank credit growth until the end of this year will be at the level of around 3-4 percent.

He said he hoped that through government efforts to encourage economic recovery, credit growth will return to normal next year.

"The figure for July seems to have started to rise, and we hope that by 2021, it will be back to normal," Wimboh Santoso stated.

In addition, he estimated, the ratio of non-performing loans (NPLs) have increased to 3.1 percent from the previous figure of about 2.8-2.9 percent.

The NPLs have risen as several banks did not fully optimize their restructuring policies, he explained.

However, he said, this is not a problem because OJK does not only observe NPL figures based on restructuring, but also NPLs that are not based on restructuring.

"No problem. We have two numbers, the NPL number which is based on restructuring, and the NPL that is not based on restructuring, " Wimboh Santoso said.

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Translator: Astrid F, Azis Kurmala
Editor: Sri Haryati
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