Based on our estimate, a number of banks would see their third party funds to be on the decline."Jakarta (ANTARA News) - A leading banker said liquidity and non performing loan will remain a big challenge to be faced by Indonesian banking industry in 2014.
President of PT Bank Jabar Banten (BJB) Tbk Bien Subiantoro said in Bali on weekend there were withdrawals of large funds from banks leaving banks to face liquidity problem in 2014.
The owners of the funds use the money to invest in state bonds (SUN), Bien said.
"Based on our estimate, a number of banks would see their third party funds to be on the decline," he predicted.
Meanwhile, NPL especially in the commercial and corporation sectors is feared to shadow the banking industry next year, he said.
"Many medium commercial and corporate borrowers with credits ranging from Rp5 to Rp100 billion are still aggressive," he said.
Their expansion ambition is not proportional with their debt repaying capacity, he said.
He said currently BJBs commercial NPL is 6.6 percent down from 14 percent last year
He also said that slowdown in credit expansion would result in lower Indonesian economic growth to around 5 percent in 2014.
"Bank Indonesia would ask banks to restrain from credit expansion and slowdown in credit expansion would have its impact on the economic growth," he said.
Bank Indonesia has predicted that bank credits would grow only 15 to 17 percent in 2014 as against normal annual growth rate of more than 20 percent.
Bien, however, predicted credits could grow 20 percent saying economic growth normally is one fourth of credit growth.
With credits expanding 20 percent the economy is expected to grow 5 percent, he said, adding the World Bank also predicted the countrys economic growth at 5 percent in 2014.
He said the government is expected to continue to be concerned more on maintaining the economic stability until 2014, the reason for the call to cut credit expansion.
The government will seek to place the countrys current account deficit in a sustainable level, he said.
Bank Indonesias Governor Agus Martowardojo has said high lending rates put by banks would slow down credit expansion to 15-17 percent in 2014.
(Uu.H-ASG/F001)
Editor: Priyambodo RH
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