Banks shift to consumer credit<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Banks will concentrate more of their efforts on consumer lending,
\ndue to the huge growth potential and the increased scrutiny of
\ncorporate loans, according to top bankers.<\/p>\n
\"For the next three years, consumer lending will continue to
\nbe the main driver of bank loans,\" said Bank Permata director
\nElvyn Masassya during a seminar here.<\/p>\n
Permata is the country's seventh largest lender in terms of
\nvolume.<\/p>\n
During the next three years, he added, motorcycle and home
\nmortgages were estimated to grow by 35 percent annually, while
\ncredit card and car loans would rise by between 20 percent and 25
\npercent, respectively.<\/p>\n
Bank Rakyat Indonesia (BRI), the fourth largest, shared the
\nsame opinion, with vice president Wayan Alit Antara saying that
\nconsumer loans would continue to be the \"engine of growth\" for
\nthe foreseeable future.<\/p>\n
Indonesia's relatively low amount of individual debt, which
\ncollectively stood at 9.5 percent of gross domestic product
\n(GDP), leaves a lot of room for growth.<\/p>\n
\"However, corporate loans also need to grow because, unlike
\nconsumer loans, they have a huge trickle-down effect on the
\neconomy,\" said Antara.<\/p>\n
Bank Indonesia data shows that consumer loans had grown by an
\naverage of some 40 percent in the past five years, from about Rp
\n40 trillion in 2000 to Rp 151 trillion last year. The growth has
\nallowed consumer loans to contribute 27.3 percent to the total of
\noutstanding bank lending, as compared to 14.9 percent in 2000.<\/p>\n
By comparison, corporate loans grew by about 15 percent per
\nyear during the same period.<\/p>\n
Elvyn attributed the slower growth of corporate loans, in
\npart, to tougher regulations issued by the central bank,
\nespecially on risk management, in a bid to prevent more defaults.<\/p>\n
\"Corporate loans will, at best, grow by 15 percent per year,\"
\nhe said, adding that it would then encourage them to divert more
\nof their funds to consumer loans, which are perceived to carry
\nlower risks.<\/p>\n
\"Banks that traditionally focused on corporate lending will be
\nburdened by the requirement and will shift to consumer lending,\"
\nsaid Elvyn.<\/p>\n
Sigit Pramono, president director of Bank Negara Indonesia
\n(BNI), also revealed that there was a tendency for banks to try
\nand reduce their dependence on corporate loans amid the growing
\nattractiveness of consumer loans.<\/p>\n
BNI is the nation's third largest bank, and lends 41 percent
\nof its loans to corporations.<\/p>\n
Sigit said that consumer loans had become the main attraction
\nof the sector, thanks to the market potential and the lower risk
\nrelative to corporate loans.<\/p>\n
However, he said that even though consumer loans carried a
\nlower risk, the risk could be lowered further by the formation of
\nthe much-anticipated credit bureau.<\/p>\n
\"To be honest, there have been a number of consumers who had
\nbad credit at one bank and still received a new loan approval
\nfrom another bank,\" said Sigit. \"This is very dangerous to banks,
\nbut made possible because, currently, nobody can check the credit
\nhistory of an individual.\" (002)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/banks-shift-to-consumer-credit-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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