Indonesian credit growth target higher than realization in 2014

Indonesian credit growth target higher than realization in 2014

Muliaman D. Hadad. (ANTARA/Wahyu Putro A.)

Jakarta (ANTARA News) - The target of credit growth at 16.46 percent was higher than realization in 2014, the Financial Service Authority (OJK) chief commissioner, Muliaman D. Hadad, said here.

Based on data from the Indonesian Banking Statistics (SPI), bank credits grew only 12 percent in the first 10 months of 2014 falling short of the target of 15-17 percent.

He described as relevant the credit growth target of 16.46 percent as set in the Banking Business Plan for 2015.

The target is relevant with potential growth of the banking industry and positive expansion of macro economy after the structural reform is running, he stated.

"The figure is quite relevant given the prevailing trend of economic development," Muliaman said.

Earlier Muliaman said that the decline in the price of gasoline since January 2015 would reduce the pressure on the domestic financial market and cut non performing credits.

As a result banks would have wider room to continue with their credit expansion program, he said.

In 2015, Muliaman asked banks to be focused on credit expansion in productive sectors that could turn out products with added value and create new jobs .

According to OJK data in the first nine months of 2014, credit disbursement was still dominated by credits for the household sector that accounted for 21.3 percent, followed by the trade sector 19.9 percent and the manufacturing sector 17.7 percent.

Muliaman, however, warned that while expanding credits banks need to observe the credit quality and liquidity.

The bank credit quality in the third quarter of 2014 was quite good, with third party funds growing faster by 4.21 percent as against credit growth of only 2.78 percent.

Meanwhile, the loan to deposit ratio (LDR) fell from 90.25 percent to 88.93 percent.

A number of bankers expressed optimism saying that bank credits would grow 15-17 percent in 2015.

"We will first see the cost of fund. In the last quarter of 2014 the cost of fund was lower than in the previous quarter. There is no reason to raise the interest. We are still within the range," finance director of Bank Tabungan Pensiunan Nasional (BTPN) Arief Harris said after a shareholders meeting of the bank.

President of Bank Mandiri Budi Gunadi Sadikin also expressed optimism that bank credits would grow higher in 2015 to around 15-17 percent.
(Uu.H-ASG/F001)

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