The Financial Services Authority (OJK) has recently reported a significant growth in the lending activities of the Indonesian banking industry throughout 2023. According to the report, lending to the industrial sector by banks amounted to Rp 7.090 trillion, marking an increase of Rp 666.68 trillion or 10.38 percent annually compared to the previous year.
Dian Ediana Rae, the Executive Director of Banking Supervision at OJK, explained that this growth was primarily driven by investment loans, which grew by 12.26 percent annually, and working capital loans, which increased by 10.05 percent annually.
"Upon reviewing the ownership of banks, state-owned banks (BUMN) emerged as the main driver of credit growth, with an annual growth rate of 12.02 percent," she said during a press conference on Tuesday (20/2/2024). She added that BUMN banks accounted for 45.64 percent of the total banking credit.
Meanwhile, the growth of Third-Party Funds (DPK) in December 2023 was recorded at 3.73 percent annually, reaching Rp 8.458 trillion. Savings accounts (Giro) contributed the most to this growth, with a 4.57 percent annual increase. Additionally, the quality of loans remained stable, with the net non-performing loan (NPL) ratio for banks at 0.71 percent and the gross NPL at 2.19 percent.
Despite the potential slowdown in global economic growth, Dian stated that the Indonesian banking industry remained resilient and competitive as of December 2023. This resilience is supported by a profitability level with a Return on Assets (ROA) of 2.74 percent and a Net Interest Margin (NIM) of 4.81 percent. Furthermore, the banking capital adequacy ratio (CAR) stood relatively high at 27.65 percent.
"It serves as a solid risk mitigation buffer amidst global uncertainty," she emphasized.
Overall, the report indicates that despite the challenges posed by the global economic landscape, the Indonesian banking sector has demonstrated resilience and robust performance. With solid growth in lending, maintained credit quality, and strong profitability and capital ratios, the Indonesian banking industry is poised to navigate various uncertainties that may arise in the future.