Optimism amidst Slower Credit Growth Projected for First Quarter of 2020 - Bank Sentral Republik Indonesia
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September 29, 2020

The latest banking survey performed by Bank Indonesia revealed faster new loan growth in the fourth quarter of 2019, with the banks anticipating slower growth in the first three months of 2020. Such developments were reflected by an increase in the weighted net balance (WNB) of demand for new loans to 70.6% in the fourth quarter of 2019 from 68.3% in the previous period, decreasing from 71.7% in the fourth quarter of 2018, however. Investment loans and consumer loans stoked demand for new loans. Nonetheless, the banks predicted slower new loan growth in the first quarter of 2020, in line with the slowing down of economic activity.

In line with flatter growth of new loans disbursed by the banking industry, respondents predicted tighter lending policy in the first quarter of 2020, as indicated by an increase in the Lending Standards Index to 12.8% from 10.6% in the previous period. The banks were expected to tighten lending standards on investment loans, working capital loans and MSME loans through maturity restrictions and administration fees.

The results of the latest Survey also indicated optimism in the banking industry concerning overall credit growth in 2020. Respondents predicted credit growth in 2020 at 9.4% (yoy). Optimism stemming from respondents’ expectation about relatively low lending risk and adequate capital (CAR) in the banking industry.

Comprehensive survey results are posted under the Banking Survey on the official Bank Indonesia website.

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