Authorities Downplay Rising Non Performing Loans

/Authorities Downplay Rising Non Performing Loans
Authorities Downplay Rising Non Performing Loans 2017-11-10T14:29:36+00:00

Financial authorities have downplayed the rising numbers of bad loans across many economic sectors, claiming that they are unlikely to affect the stability of the financial system. Bad loans amounted to Rp 113.08 trillion ( US$8.26 billion ) by the end of the first quarter, an annual increase of 27.9 percent, and left the NPL ratio at 2.8 percent. The staggering rise was reported in the provision of accommodations, food and drink as the bad loans jumped by almost 100 percent. Several other sectors suffered from the negative trend as well. While the processing sector’s NPLs surged 61.9 percent year-on-year ( yoy ), transportation’s NPLs climbed 26.7 percent yoy. Many attribute the increase to late debt repayments as companies struggle to make ends meet while the domestic and global economies remain weak. As reported before, the domestic economy grew slower than expected in the first quarter at 4.92 percent. It slowed from the previous 5.01 percent in the last quarter of 2015. BI Governor Agus Martowardojo said that the higher NPL had not affected the country’s overall economy and was unlikely to do so in the future. He pointed to the banking industry’s capital adequacy ratio ( CAR ) — an important indicator of capital strength – and said it was still at 21.8 percent in March, higher than the current minimum CAR requirement of 8 percent. “In general, the country is financially stable, even though we can see that the NPL has risen slightly, whether at banks or at non-banking financial institutions,” Agus said on Monday. (Jakarta Post)