Financial services sector sustain stability in 2021 first-semester

Financial services sector sustain stability in 2021 first-semester

OJK Deputy Commissioner Rahmat Waluyanto (center), OJK Deputy Commissioner for Consumer Education and Protection Sri Rahayu Widodo (second left), Director of Consumer Protection Policy Development, Anto Prabowo (right), Australian AID Representative Melisa Go (left) and World Bank Representative Djauhari Sitorus (second right) bring plant seeds at the closing ceremony of the Market conference seminar in Nusa Dua Bali, Tuesday (9/9). (ANTARA PHOTO/HO/Ardi)

Although domestic economic indicators as of June still show continued recovery, the OJK is observing a decline in mobility due to the implementation of the public activity restrictions (PPKM)
Jakarta (ANTARA) - The Financial Services Authority (OJK) highlighted the financial services sector's sustained stability in the 2021 first-semester, apparent from improved indicators, including banking intermediation, fundraising in capital market, and maintained prudential ratio in financial service institutions.

"Although domestic economic indicators as of June still show continued recovery, the OJK is observing a decline in mobility due to the implementation of the public activity restrictions (PPKM), which is feared to affect the pace of economic recovery in future," Deputy Commissioner for Public Relations and Logistics at OJK Anto Prabowo noted in a statement in Jakarta, Thursday.

Amid such developments, the domestic financial market remained stable. As of July 23, 2021, the Indonesian Composite Index (IHSG) was recorded to have strengthened to the level of 6,102, or grew 1.9 percent (mtd), with non-resident funds flowing in at Rp2.02 trillion.

The Government Securities (SBN) market was also observed to strengthen, with the average yield on SBN falling 13.5 basis points (bps) across all tenors. However, non-resident investors recorded a net sale of Rp11.73 trillion.

Fundraising in the capital market until July 27, 2021, has reached a value of Rp116.6 trillion, an increase of 211 percent from the corresponding period last year, with 27 new issuers conducting initial public offering (IPO). In addition, public offerings from 86 issuers are still in process, with a nominal value of Rp54.2 trillion.

Meanwhile, the OJK supports the government's program to expedite community vaccination by opening COVID-19 vaccine centers in various regions in collaboration with the financial services industry and the Ministry of Health, with a target of 10 million vaccines by December.

"Acceleration of vaccination is believed to be the main key to building communal immunity, so that the people's mobility can return to normal and the economy can move again," Prabowo stated.

The OJK also pointed to the continued global economic recovery, especially in the world's major economies, along with vaccination rates and mobility that had started to return to pre-pandemic levels.

In addition, the monetary policy in the world's major countries is expected to remain accommodative, thereby reducing the liquidity risk on global financial markets.


Banking intermediation

Banking credit in June 2021 had increased by Rp67.39 trillion and grew by 0.59 percent (yoy), continuing the trend of improvement over the last four months in line with the stimulus from the government, OJK, and other relevant authorities.

Meanwhile, Third Party Funds (DPK) again recorded double-digit growth of 11.28 percent (yoy).

"In terms of interest rates, implementation of the policy of lowering interest rates has continued to reduce lending rates to a quite competitive level," Prabowo remarked.

The insurance sector recorded premium collections of Rp31 trillion in June 2021, comprising life insurance of Rp21.1 trillion and general insurance and reinsurance at Rp9.9 trillion.

Furthermore, fintech P2P lending during the same period recorded a significant growth in the financing debit balance to reach Rp23.38 trillion, respectively recorded at Rp11.8 trillion and Rp21.7 trillion in June 2020 and May 2021.

Meanwhile, receivables from finance companies are still contracting and recorded a negative growth of 11.1 percent (yoy) in June 2021.

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