Banks expect strong loan growth next year<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
Major banks predicted for next year continued brisk growth of
\nnew loans to the private and consumer sectors, as they expected
\nparts of the local economy to remain unscathed from the economic
\ngloom that has befallen much of the world.<\/p>\n
The country's largest bank, state-owned Bank Mandiri, and the
\nlargest privately-owned one, Bank Central Asia (BCA), forecast a
\ncredit growth of up to 25 percent and 30 percent respectively.<\/p>\n
"Based on our experience, our loans will grow by between 20
\npercent to 25 percent," Bank Mandiri president director E.C.W.
\nNeloe told reporters on the sidelines of a post-Idul Fitri
\nholiday gathering on Wednesday.<\/p>\n
Bank Mandiri's loans which were channeled to third parties,
\ntotaled Rp 40 trillion (about US$3.95 billion) as of Sept. 30,
\n2001.<\/p>\n
Neloe said many of the new loans would be restructured non-
\nperforming loans (NPLs), which Bank Mandiri inherited from the
\n1997 financial crisis.<\/p>\n
NPLs are loans on which interest rate payments are overdue by
\nmore than 90 days. Restructuring them allows indebted companies
\nto restart payments on the loans under new conditions.<\/p>\n
There are concerns, however, that recovery in the real sector
\nis going too slow and that it may stall debt restructuring talks.<\/p>\n
These concerns partly stem from a sluggish global economy that
\nhas undermined export sales and has cut into companies' earnings.<\/p>\n
"It's going to be difficult next year, but there is one thing
\nthat remains strong; it's consumption and we must take advantage
\nof this," Neloe said.<\/p>\n
His statement concurs with the government's forecast of a
\nstrong local market driving next year's economic growth.<\/p>\n
BCA president director Setijoso also shared the optimism,
\nsaying the bank would channel about one-third of its new loans
\nnext year to the retail sector, meaning to consumers.<\/p>\n
"I think it (credit growth) can reach about 30 percent," he
\nsaid. The other two-thirds of new loans would be channeled evenly
\nbetween large corporate clients and small and midsize companies.<\/p>\n
The bank has loans to third parties amounting to some Rp 11.6
\ntrillion as of Sept. 30, 2001.<\/p>\n
PT Lippo Bank president director Ian B. Clyne also expected
\nthe local economy to maintain its drive on the bank's new loans.<\/p>\n
"Some sectors have not been affected by the global economy,
\nthe general feeling is that this will continue in 2002," he told
\nThe Jakarta Post.<\/p>\n
Because of this, he saw no need to change the bank's lending
\nstrategy for next year.<\/p>\n
As it did this year, Bank Lippo would extend 40 percent of its
\nnew loans to small and medium enterprises, and another 40 percent
\nto corporate clients. The remainder would go to the retail
\nsector, he explained.<\/p>\n
Bank Lippo approved new loans worth Rp 1.1 trillion this year,
\nand Clyne expected the figure to hit Rp 2 trillion in the next.<\/p>\n
Expectations, despite the slump in export sales, that new
\nloans may grow at about the same rate as they did this year,
\npoint to the presence of a strong local market.<\/p>\n
As loans to exporters would likely remain weak, many of the
\nnew loans would go to industries catering to the local market.<\/p>\n
Analysts predicted the global economy to remain in the
\ndoldrums for most of next year, putting a damper on export-
\noriented loans.<\/p>\n
As there is no clear sign when the global economy will bottom
\nout, questions remain on whether the local economy could count on
\nan upswing in export sales next year to give it a late boost.<\/p>\n
Much will rest on the timing of a recovery in the U.S.
\neconomy, whose local market absorbed most of the export goods
\ngenerated in countries like Indonesia.<\/p>\n
Usually a time-lag of about six months exists before Indonesia
\ncan feel the impact of a rise or slump in the U.S. economy.<\/p>\n
Some said the U.S. Federal Reserve's gradual interest rate
\ncuts since early this year had begun to pay off, albeit muted by
\nthe Sept. 11 terrorist attacks which had shaken consumer
\nconfidence.<\/p>",
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