Bank loan growth dampened by interest rates and rising fuel prices

TEMPO.CO, Jakarta – Bank Mandiri’s team of economists estimates that the growth of bank lending in Indonesia in 2022 will not reach double digits, mainly due to the impact of inflation and the rising trend of Bank Indonesia (BI) benchmark interest rates.

Dendi Ramdani, director of industry and regional research at Bank Mandiri, said credit growth in 2022 is likely to reach only 9.9%. However, this figure is still within BI’s projected bank credit growth range of around 9-11% on an annual basis this year.

“We estimate credit growth in 2022 at 9.9%,” Dendi said in an Industry & Regional Brief, Monday, September 12.

He also said credit growth will face a number of hurdles such as BI’s 7-day reverse repo rate benchmark at 3.75% as of Aug. 23 from 3.5% previously. .

“And added to the tight liquidity due to the increase in statutory reserves. Rising inflation may also be another challenge after the government decided to raise fuel prices, which could impact on the weakening of purchasing power,” he said.

Bad debts or non-performing loans (NPLs) for this type of credit tend to increase slightly. Dendi said the NPL for productive credit in May 2022 was relatively at the 3.5% level, up slightly from the April 2022 record high of 3.4% on an annual basis.

Business, credit to the electricity, gas and water sectors in all provinces continues to contract, representing a decline of 3.4% on an annual basis in May 2022. While the increased lending to the mining sector in North Maluku, Southeast Sulawesi and Central Sulawesi, respectively. – increased by 29,483.2%, 2,211.4% and 685.9%, respectively.

ARRIJAL RACHMAN

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