Consumer loans demand slows down<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
Consumer lending is expected to slow this year following on
\npredicted rise in interest rates, an analyst from the Hongkong
\nShanghai Banking Corporation (HSBC) said.<\/p>\n
Bank lending to the corporate sector, however, will probably
\nremain robust with companies needing new financing for future
\ninvestment ventures, HSBC global markets head of sales Radianto
\nKusumo said.<\/p>\n
With such factors in place, the London-based bank is
\nestimating that Indonesia's economy could expand by up to 5.2
\npercent this year -- driven more by a growth in fixed investments
\nrather than consumption.<\/p>\n
\"Cheap consumer loans will unlikely be as available as before
\ndue to rising interest rates,\" he said on Tuesday, during a
\npresentation of the bank's economic review for the country.<\/p>\n
The rise in credit interest rates, Radianto explained, would
\nbe the result of the central bank's tight-biased monetary policy
\nof raising its one-month Bank Indonesia Certificate (SBI)
\nbenchmark interest rate to stem any picking up of inflation.<\/p>\n
HSBC is forecasting that the SBI interest rate could reach 8.3
\npercent by the end of the year. The current rate is 7.7 percent.<\/p>\n
Radianto said the rate increase would go hand in hand with the
\nfact that consumption spending -- including on credit -- will
\nprobably reach saturation point after experiencing an average 35
\npercent growth over the past four years.<\/p>\n
\"The spending was mostly for fulfilling basic needs, so any
\nfuture spending would be for secondary needs,\" he said. \"If the
\ninterest rates of the loans go up, consumers will most likely
\nhold off in taking the loans as it would not be urgent.\"<\/p>\n
Consumer loans include credit card purchases, as well as
\ncredit for vehicles and houses, among others.<\/p>\n
However, Radianto is still sees the corporate sector expanding
\nstrongly, undisturbed by any possible interest rate rise.<\/p>\n
He pointed to the fact that the utilization rate of factories
\nin Indonesia, according to a World Bank study, has reached a 20-
\nyear high and would therefore be in need of replenishing.<\/p>\n
Many corporations have also finished restructuring and
\nconsolidating their balance sheets following the 1997 Asian
\nfinancial crisis and are ready to take on new financing for
\nfuture business ventures.<\/p>\n
\"They are in need of new lending at any cost, as long as the
\nreturns on the investments they targeting are still promising,\"
\nhe said.<\/p>\n
Meanwhile, the forward earnings expectations of companies are
\nalso on the rise, indicating a possible rise as well in
\ninvestment.<\/p>\n
\"According to our observations, a trend of gross fixed
\ninvestment usually follows forward earnings expectations of
\ncompanies,\" Radianto said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/consumer-loans-demand-slows-down-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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