Banks cautiously upbeat on 2002 outlook

Banks cautiously upbeat on 2002 outlook

Berni K. Moestafa, The Jakarta Post, Jakarta

Several major banks share the same level of confidence when
asked about the banking outlook for 2002: "cautiously
optimistic."

During a meeting with Bank Indonesia on Friday, bankers were
also said to have asked for lower rates from Bank Indonesia, so
as to boost their loan expansion.

"Prospects for 2002 are quite good....the term is cautiously
optimistic," said D.E. Setijoso, president of PT Bank Central
Asia (BCA), once the largest private bank.

That was because the global economy was still in the doldrums,
while the domestic economy had remained strong, he said.

Over the past few days, faint hopes have emerged that the
global economy is bottoming out. Signs of this was evident,
albeit weak, in the U.S. where activity in the manufacturing
sector grew, indicating a higher demand for products that may
include imports.

Analysts estimate developed economies, led by the U.S., may
return to growth in the second half of the year.

Until then, however, export sales will remain sluggish.

The country's largest bank, state-owned Bank Mandiri shared
the cautious prognosis, saying consumption will lead the local
economy.

"We have a growing GDP (gross domestic product) and that is
dominated by consumption," Neloe told reporters.

Based on that, he was confident Bank Mandiri could maintain
last year's loan growth rate, which earlier he said was 30
percent.

He added that during the meeting bankers had asked for lower
Bank Indonesia interest rates, which have been kept high to curb
inflation pressure and defend the weak rupiah.

Most banks purchase Bank Indonesia promissory notes although
investing in loans may earn them more because they carry higher
interest rates. But these expensive rates deterred loan demand.

Lowering Bank Indoensia rates, may help spur demand for loans.

Friday's meeting with Bank Indonesia was also attended by,
among others, Bank Raykat Indonesia (BRI), Bank Internasional
Indonesia (BII), and Bank Universal.