Illustrative image (Photo: Internet) The Bank Indonesia (BI) has recently announced a survey indicating that the country’s banks have seen optimistic signs and the economy will see stronger development in the fourth quarter of this year.
According to the survey, around 51.3 percent of respondents said they would expand credits in the last quarter of 2015 while 43.6 percent said they would maintain their spending as in the third quarter.
Executive Director of the BI Communications Department Tirta Segara said the optimism is based on the country’s economic conditions and the cutting down of lending interest rates due to the expected deposit interest rate decline.
He said higher credit expansions were already recorded in the third quarter this year, adding credit balance increased to 77 percent from 66.7 percent in the previous quarter.
However, BI called on banks to remain cautious against growing risk of non-performing loans (NPL), especially corporate credits, though the bad debt is still within a normal level of below 5 percent.
In August 2015, NPL of working capital credits and investment credits were 3.2 percent and 2.91 percent, respectively, representing slight increases compared to June.
The highest NPL was recorded in the construction sector reaching 5.46 percent, followed by public service, social culture and entertainment sector at 4.46 percent; trade and retail at 4.11 percent; transport, warehouse and communications at 3.72 percent; and mining and quarry sector at 3.71 percent.-VNA
