BI sees 2002 bank loans up over Rp 62 trillion
BI sees 2002 bank loans up over Rp 62 trillion
Berni K. Moestafa, The Jakarta Post, Jakarta
Bank Indonesia expects total bank loans to grow by Rp 62.12
trillion (about US$5.49 billion) this year, as compared to Rp
47.7 trillion in new loans last year, on further loan expansion
to small and medium enterprises.
Factors affecting this year's loan growth were the
restructuring of loans, the domestic security and political
situation and development in the global economy, Deputy Governor
of Bank Indonesia Maman Sumantri said on Wednesday.
"In 2002, total loans are projected to reach Rp 427.4
trillion," Maman said in his paper, which reviewed the
performance of banks in 2001 and included a banking sector
outlook for 2002.
Total bank loans, as of November 2001, stood at Rp 357.2
trillion, he said.
Bank Indonesia's predictions cast hope that the banking sector
would gradually return to loan-based income growth.
To date, the earnings of banks have stemmed mostly from the
interest rates of state bonds received under the recapitalization
program.
Maman said loans made up only 34.7 percent of the banking
industry's productive assets, with a chunky 44 percent consisting
of recapitalization bonds.
"Interest from government bonds contribute 45 percent of the
total income generated by interest from the entire banking
industry," he said, adding this earning composition was
unsustainable.
Banks with recapitalization bonds tied to fixed rates are at
risk of negative spread. This situation arises if banks earn less
from their loans or bonds then they spend on paying customers for
their deposit interest rates.
Deposit interest rates fluctuate in line with Bank Indonesia's
benchmark rates, which have been hovering at over 17 percent over
the past few months.
On the other hand, fixed rate recapitalization bonds carry
average coupon rates of around 12 percent.
New loans also allow banks to tap higher interest margins than
they normally earn from the coupon rates from government bonds.
Several bankers interviewed last week expressed confidence of
strong consumer spending creating demand for loans this year.
The one industry sector they said would generate new loans
were small and medium enterprises.
Catering mainly for the local market with its robust demand
for consumer products, small and medium companies were seen as
best positioned to outweather the slump in the global economy.
Some analysts, however, have doubted that consumer spending
could maintain last year's robust growth.
Inflation, which climbed to 12.55 percent last year, lingered
uncertainly on the political front and featured the rapid
depletion of income sources, might break the growth in
consumption.
Commenting on this, Minister of Finance Boediono said that
local consumption here was different from developed nations.
"Our consumer spending is characterized by the consumption of
basic commodities," Boediono explained to reporters on Wednesday.
Even if demand for luxury goods, which has been growing fast
since 1999, fades this year, demand for basic commodities will
maintain its strong drive.
Boediono said the growth in population would fuel consumption
at home, furthering economic growth.
This is in contrast to consumer spending among developed
nations, which tends to rest on demands for secondary consumer
products such as cars or tourism, according to him.
Meanwhile, Maman also indicated an upswing in Indonesia's
falling export revenues. He estimated that foreign currency
denominated loans might reverse to 0.5 percent growth this year,
from a negative 0.17 percent last year.
A turnaround in foreign currency denominated loans, he
explained, would likely depend on the growing need for export
financing.