Bank Indonesia Reports Modest 3.8% Growth in Third Party Funds (DPK) Amid Shifting Savings Patterns

In the fiscal year 2023, Bank Indonesia (BI) reported a modest 3.8% growth in Third Party Funds (DPK), amounting to Rp 8,234.2 trillion. The monthly figures for December indicate a slightly higher growth compared to November’s 3.04%.

This incremental increase in DPK can be attributed to the corporate sector, which experienced a 5% growth, surpassing the 3.1% recorded in November. Conversely, individual DPK witnessed a milder ascent of 3.2%, marking a decline from the 5.1% reported in November 2023.

Delving into the specifics, BI’s data reveals that savings exhibited a 2% growth, demand deposits saw a 3.9% increase, and time deposits recorded a robust growth of 5.4% by the close of 2023.

This data mirrors the observations of Aviliani from the Institute for Development of Economics and Finance (Indef), who recently remarked on the deceleration of public savings growth in 2023. Aviliani highlighted that the overall growth of Third Party Funds (DPK) during 2023 was a mere 4%.

“The growth of DPK is notably low, reaching only 4%,” emphasized Aviliani during a discussion on the ‘Evaluation and Perspectives of Female Economists at Indef on the National Economy,’ as quoted on Monday (22/1/2024).

Further scrutiny of the statistics disclosed by Aviliani reveals that, as of November 2023, banking DPK had expanded by a mere 3.8% year on year. Concurrently, demand deposits demonstrated a 3.4% year-on-year increase, while savings and time deposits witnessed more moderate growth rates of 2.5% and 5.2%, respectively.

Aviliani elucidated that the lackluster growth in DPK could be attributed to a shift in the saving habits of the populace. Millennials, she asserted, are increasingly diversifying their saving methods, exploring alternative instruments such as stocks and bonds rather than relying solely on traditional banking channels.

“The inclination among millennials is evolving, with a shift from traditional banking to embracing instruments like stocks and bonds. This transformation contributes to the diminishing trajectory of DPK, as millennials embrace a more diversified investment landscape,” elucidated Aviliani.

Responding to the focal point on DPK, BI Governor Perry Warjiyo underscored that DPK provides an incomplete representation of a bank’s financing prowess. He emphasized that considering DPK alone would be inadequate, as it only reflects one facet of the bank’s asset profile, comprising credits, securities, and near-cash components.

“Measuring funding capability solely based on DPK overlooks the broader financial spectrum. Banks possess various assets, including credits, securities, and near-cash elements, contributing to a comprehensive understanding of their financial landscape,” elucidated Perry during a press conference on Monday (21/1/2024).

Perry further expounded on the securities component, noting the existence of a liquidity tool. This comprises securities that can be swiftly converted into liquid assets, bolstering the bank’s capacity to facilitate credit distribution.

Moreover, Perry clarified that the credit distribution landscape remains robust, exhibiting a noteworthy growth of 10.38% in 2023. The ratio of Liquid Assets to Third Party Funds (AL/DPK) stands at 28.37%, underscoring the bank’s strategic allocation of resources.

Reflecting on the risk appetite and the evolving risk management strategies embraced by banks, Perry conveyed optimism about the ongoing enhancements. He underscored the burgeoning growth across multiple sectors, indicating a positive trend in both supply and demand dynamics.

As the economic landscape evolves, BI remains vigilant in adapting its strategies, ensuring a resilient and dynamic financial ecosystem that responds adeptly to the changing dynamics of the financial landscape.