BII slowing growth of housing credits
BII slowing growth of housing credits
JAKARTA (JP): Bank Internasional Indonesia (BII), a major bank listed on the domestic stock exchanges, is slowing the growth of its loans for property purchases this year in a bid to avoid an increase in bad loans.
"Extending loans for the property sector is getting more risky because the property market, especially that of condominiums and apartments, has been now in oversupply," BII's president, Indra Widjaja, told a hearing with Commission VII of the House of Representatives yesterday.
"Therefore, we are committed to checking the expansion of property loans this year at a rate lower than last year's level of 11.5 percent," he said.
Governor of Bank Indonesia (the central bank), J. Soedradjad Djiwandono, last December urged the banking industry to slow the growth of banking loans, especially those for the property sector, to avoid being trapped in huge non-performing loans.
Banking loans grew by 22 percent in 1994 and are expected to expand by 19 percent this year.
A recent report said that, as of last October, banking loans for the property business in the country reached Rp 28.2 trillion (US$12.78 billion), which accounted for 15 percent of the country's total banking loans. Approximately 70 percent of the property loans were earmarked for the development of apartments and middle-class houses.
Indra said yesterday that his bank will increase loans for small-scale businesses, cooperatives and small-scale plantation farmers.
"We will provide Rp 766.28 billion for small businesses and cooperatives this year, as compared to Rp 422.70 billion last year and Rp 33.77 billion in 1993," he said.
Indra said that total credits provided by BII as of the end of 1994 increased by 45.5 percent to Rp 6.78 trillion from Rp 4.66 trillion as of the end of 1993. "We plan to expand the credits by 20.77 percent this year," he said.
He said that BII's bad loans decreased to 0.09 percent of its total outstanding loans in 1994 from 0.21 percent in 1993.
He also reported an increase in BII's consolidated after-tax profit to Rp 146.03 billion last year from Rp 112.43 billion 1993. (fhp)