Economist: High GDP Drives Bank Confidence but Does Not Yet Alter Risk Appetite

Jakarta (ANTARA) - Permata Bank’s Chief Economist Josua views the high economic growth in the first quarter of 2026 as capable of improving banking confidence, but not yet sufficient to immediately alter banks’ risk appetite aggressively.

“Banks will still look at debtor quality, cash flow, sector prospects, and repayment ability, especially amid rupiah pressures, energy prices, and global uncertainties,” Josua said when contacted by ANTARA in Jakarta on Wednesday.

Josua assesses that the 5.61 per cent year-on-year (yoy) economic growth in Q1 2026 will give a positive signal for credit demand, but its impact is not automatically significant and not evenly distributed.

This growth figure indicates that economic activity is still running strong, particularly due to household consumption, government spending, investment, and seasonal boosts from Ramadan and Eid al-Fitr.

However, some drivers of Q1 growth are seasonal and influenced by earlier government spending realisations, so banks still need to see if that momentum continues into recurring business demand in subsequent quarters.

Credit standards are also more cautious, reflected in the positive credit disbursement standards index of 0.15. This shows that banks are not closing the credit tap, but are more careful in selecting debtors.

For Q2 2026, the signals are better as the new credit disbursement SBT is projected to rise to 96.65 per cent and credit standards are expected to be looser.

“So, there is room for improvement, but it still depends on whether Q1 growth truly continues into new orders, production, and business expansion after the Eid effect ends,” Josua said.

Regarding undisbursed loan facilities, Josua considers their amount to be very large and an opportunity to accelerate credit.

As a note, according to BI data, the undisbursed loan ratio is still quite large at 22.59 per cent of the available credit ceiling or equivalent to Rp2,527.46 trillion.

However, he warns that Q1 2026 economic growth alone is not enough to automatically increase the disbursement of those credits.

“Many credit facilities have not been drawn down because projects have not started, demand is not strong enough, raw material prices are still volatile, permits and procurement are not complete, or companies choose to delay expansion while waiting for exchange rate and energy cost certainties,” Josua explained.

For those facilities to turn into productive credit, according to Josua, the most determining factors are demand certainty, production cost stability, project certainty, debtors’ ability to maintain cash flow, and banks’ confidence that credit risk does not worsen.

“If those factors improve, the undrawn facilities can become a source of rapid credit growth without having to open too large new ceilings,” Josua said.