Banking Credit Thrives, Reaching Rp 6.577 Trillion in May 2023

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The recent announcement by the Financial Services Authority (OJK) reveals that the banking credit has experienced a substantial growth, with an impressive 9.39 percent year-on-year increase, reaching a staggering Rp6,577 trillion in May 2023.

Dian Ediana Rae, the Executive Chairman of Banking Supervision at OJK, has evaluated this accomplishment, attributing it to the remarkable expansion of investment credit, which has surged by an impressive 12.69 percent. In her statement during the press conference held on Tuesday (4/7), she further elucidated, “Among the different types of ownership, the most significant growth in credit was observed in domestic private commercial banks, which recorded a remarkable 15.2 percent year-on-year increase.”

In contrast, Dian also noted a slight deceleration in the annual growth of Third Party Funds (DPK) during May 2023, which stood at 6.55 percent year-on-year, equivalent to Rp8,007 trillion. This slowdown was primarily influenced by a decline in demand deposits, as it experienced a noteworthy 8.35 percent year-on-year contraction. Comparatively, in the previous month of April, demand deposits had reached a level of 13.61 percent.

Despite these fluctuations, Dian reassured that the liquidity of the banking industry remains at a satisfactory level, with the liquidity ratios being effectively maintained. This is evidenced by the Liquidity/Non-Core Deposit (AL/NCD) ratio and the Liquidity/DPK (AL/DPK) ratio, both of which have witnessed an increase to 123.27 percent and 27.52 percent, respectively. It is worth noting that these figures surpass the prescribed threshold limits of 50 percent and 10 percent, respectively, thereby reflecting a commendable liquidity position.

Moreover, Dian emphasized the continued soundness of credit quality within the sector, with the net Non-Performing Loan (NPL) ratio standing at a mere 0.77 percent, and the gross NPL ratio at 2.52 percent.

The ongoing restructuring of loans related to the COVID-19 pandemic has displayed a notable decline, both in terms of the nominal value and the number of customers involved. The figures have plummeted from Rp13.96 trillion to Rp372.07 trillion, accompanied by a significant reduction of 100,000 customers, resulting in a total of 1.64 million customers availing themselves of these restructured loans.

Dian underscored that market risks have experienced a decline, as evidenced by the stable position of the Net Open Foreign Exchange Position (PDN) at 1.57 percent. This figure stands considerably below the designated threshold of 20 percent, further attesting to the favorable market conditions.

Furthermore, the capitalization of the banking sector remains robust, with the Capital Adequacy Ratio (CAR) of the industry reaching an impressive 25.21 percent.

Dian affirmed that the OJK is steadfast in its commitment to fortifying the resilience of the banking sector against various macroeconomic pressures, geopolitical challenges, cyber-attacks, as well as focusing on bolstering digital maturity and digital resiliency.

“As part of our continuous efforts, the OJK urges banks to further enhance their governance frameworks, optimize asset and liability management practices, and reinforce their anti-fraud systems,” Dian concluded.