ID :
36407
Thu, 12/18/2008 - 23:19
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https://www.oananews.org//node/36407
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BANK CREDITS PREDICTED TO DROP IN 2009
Jakarta, Dec 18 (ANTARA) - As a result of the global economic recession, the bank credit growth in 2009 is predicted to tumble after it has been growing rapidly in 2007 and 2008, Bank Indonesia (BI) Deputy Governor Mulyaman D Hadad said here on Thursday.
He said that BI had made an 'anecdotal' credit growth prediction at 15-12 percent in 2009. It showed a drastic fall from this year's credit expansion of about 30 percent.
But the figure, he said, still needed to be studied further because banks had yet to report to BI their business plans. He said that when the prediction was communicated with banks, they felt it was hard for them to achieve it.
"In our discussion with banks, some said that the 15-20 percent projection was too hard to achieve. But some middle-scale ones said the figure is acceptable. So, we will see later when the banks submit their business plans for 2009," he said.
He said that the BI rate prediction was still an anecdotal figure which still could continue to change.
The central bank deputy governor said that the challenge of banks in providing credits next year was heavy because liquidity crisis would still prevail. This will cause bank to slow credit expansion in order to keep the stability of their liquidity.
In the meantime the impact of global financial crisis will also affect the real sector. The decline in the world demand will cause many companies cut their production capacity or terminate it at all.
This conditions are feared to turn bad credit or non-performing loans, causing banks to be selective in extending credits, Hadad said.
"Overall, we are afraid that borrowers' ability to repay their loans would decline. If there is such a prediction it would be better for banks to take anticipatory steps and mitigate risks," he added.
Over the past two years, bank credits expanded significantly. BI predicted that its growth would reach 22 percent in 2007 but it turned out to be able to reach 25.5 percent to Rp1,045.7 trillion or an expansion of Rp41.05 trillion.
BI's target in 2008 was set at 26 percent but it has reached 30 percent. In October, the year-on-year credit growth reached 34 percent so that it could reach 30 percent at the end of the year, Hadad added.
He said that BI had made an 'anecdotal' credit growth prediction at 15-12 percent in 2009. It showed a drastic fall from this year's credit expansion of about 30 percent.
But the figure, he said, still needed to be studied further because banks had yet to report to BI their business plans. He said that when the prediction was communicated with banks, they felt it was hard for them to achieve it.
"In our discussion with banks, some said that the 15-20 percent projection was too hard to achieve. But some middle-scale ones said the figure is acceptable. So, we will see later when the banks submit their business plans for 2009," he said.
He said that the BI rate prediction was still an anecdotal figure which still could continue to change.
The central bank deputy governor said that the challenge of banks in providing credits next year was heavy because liquidity crisis would still prevail. This will cause bank to slow credit expansion in order to keep the stability of their liquidity.
In the meantime the impact of global financial crisis will also affect the real sector. The decline in the world demand will cause many companies cut their production capacity or terminate it at all.
This conditions are feared to turn bad credit or non-performing loans, causing banks to be selective in extending credits, Hadad said.
"Overall, we are afraid that borrowers' ability to repay their loans would decline. If there is such a prediction it would be better for banks to take anticipatory steps and mitigate risks," he added.
Over the past two years, bank credits expanded significantly. BI predicted that its growth would reach 22 percent in 2007 but it turned out to be able to reach 25.5 percent to Rp1,045.7 trillion or an expansion of Rp41.05 trillion.
BI's target in 2008 was set at 26 percent but it has reached 30 percent. In October, the year-on-year credit growth reached 34 percent so that it could reach 30 percent at the end of the year, Hadad added.
