Indonesia banks entering challenging phase: S&P<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Indonesian banks are entering a new phase of transformation,
\nwhich will pose greater challenges for industry participants,
\naccording to international rating agency Standard & Poor's (S&P)<\/p>\n
In the medium term, the Indonesian banking sector is poised to
\nenter a phase of increasing risk with added pressure on its
\nearning margins, S&P said in its commentary titled "Changing
\nDynamics Pose Greater Challenges for Indonesian Banking Industry"
\npublished on Thursday.<\/p>\n
Nevertheless, it said, the industry's success in managing
\nthese emerging risks will depend on the extent of restructuring
\nundertaken by the banks themselves, together with the banking
\nreforms that the central bank, Bank Indonesia, has introduced so
\nfar.<\/p>\n
However, two positive structural developments are expected to
\nmitigate the challenges brought about by the changing industry
\ndynamics: growing foreign investment in domestic commercial
\nbanks, bringing in best practices; and implementation of
\nmeasures\/initiatives by authorities, such as risk management
\nprograms.<\/p>\n
"The challenges to the industry fall broadly into two
\ntypes--pressure on margins and asset quality risks," said S&P
\ncredit analyst Adrian Chee of the Financial Services Ratings
\nGroup.<\/p>\n
Pressure on margins is expected to come with the decline in
\nbenchmark interest rates and rising competition. Asset quality
\nissues are expected as banks increase lending, with lower
\nreliance on government-related securities, the rating firm said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/indonesia-banks-entering-challenging-phase-sp-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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