Bad loans at state banks rise by $137m in two months

JAKARTA (JP): Bad loans at the country's seven state banks increased by Rp 313 billion (US$137.7 million) within the April- June period of this year, Governor of Bank Indonesia J. Soedradjad Djiwandono disclosed yesterday.

Soedradjad said at a hearing with the Budget Commission of the House of Representatives that bad loans at the state banks increased to Rp 7.316 trillion as of last June, from Rp 7.003 trillion as of April.

The seven state banks are Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia, Bank Negara Indonesia, Bank Pembangunan Indonesia, Bank Rakyat Indonesia and Bank Tabungan Negara.

Soedradjad said bad loans at the state banks account for 73.4 percent of the total bad loans at all of the country's commercial banks, which as of June stood at Rp 9.97 trillion, or 4.16 percent of their outstanding credits, up from Rp 9.78 trillion, or 4.24 percent of the outstanding credits as of April.

He added that bad loans at provincial development banks increased to Rp 533 billion as of last June, from Rp 515 billion as of April.

Bad loans at domestic private commercial banks, however, decreased slightly to Rp 1.668 trillion as of last June from Rp 1.795 trillion as of April, while bad loans at foreign-owned and joint-venture banks declined to Rp 454 billion from Rp 468 billion.

In dealing with bad loans, Soedradjad said Bank Indonesia, the central bank, focuses on solving its current bad loans first. Attention is then given to other banks suffering from bad loans and the prevention of future bad loans. Guidelines are then introduced to formulate credit policies and standard internal audits for commercial banks.

"I cannot yet report the results of our efforts to deal with bad loans because the credit policy guidelines and internal audit policy we issued last March will come into effect in January next year," Soedradjad told the hearing.

He said those efforts are expected to reduce the emergence of new bad loans. "Our bad loans in the future will decline further not only because of the decrease in existing bad loans but also from the avoidance of new bad loans."

Despite the increase in bad loans, Soedradjad said problem and doubtful loans at all commercial banks had decreased accordingly. Problem loans as of June fell to Rp 5.7 trillion, or 2.38 percent of their outstanding credits, from Rp 5.95 trillion, or 2.58 percent of outstanding credits as of April.

Doubtful loans at commercial banks as of June shrank to Rp 12.19 trillion, or 5.09 percent of outstanding credits, from Rp 12.51 trillion, or 5.41 percent of outstanding credits as of April.

Meanwhile, the collectibility rate of loans provided by commercial banks increased to 88.37 percent of outstanding credits as of June, from 87.77 percent as of April. (rid)