Aditya Suharmoko, Jakarta – Despite pressure from high inflation and the upward trend in the Bank Indonesia (BI) benchmark interest rate, bank loans managed to grow at 13.8 percent in the first half of the year from 2007, BI data show.
BI's full-year lending growth target stands at 24.6 percent.
BI deputy director of banking research and regulation Wimboh Santoso said Wednesday bank lending in the first semester grew to Rp 1,190 trillion (US$131.16 billion). At the end of 2007, lending stood at Rp 1,045.7 trillion.
Banks channeled Rp 52.3 trillion in loans in June alone. Wimboh said most of the loans were channeled to the trade and industry sectors, which received Rp 12.9 trillion and Rp 9 trillion in loans in June, respectively.
"Loans to all sectors increased (in the first half of 2008), except for the social services sector and electricity sector," he said. Year-on-year inflation in June stood at 11.03 percent, up from 10.38 percent in May, after the government raised fuel prices on May 24, the Central Statistics Agency (BPS) reported.
Since May, BI has raised its key rate by 100 basis points, bringing its rate to 9 percent. With the increasing BI rate, banks will have to adjust interest rates upward, a move it is feared will dampen demand for new loans.
However, Wimboh said based on first semester lending figures, the high inflation and BI rate had yet to have significant impacts on loans – a statement echoed by Ryan Kiryanto of Bank Negara Indonesia (BNI).
The high BI rate, he said, would not severely affect loans, or economic growth, "as long as the central bank keeps the rate in single digits".
Ryan said he did not see rising lending rates dampening demand for loans from businesspeople in the first semester, particularly those opening businesses in areas outside Java.
Indeed, the mining and agriculture sectors, benefiting from a commodity windfall and located mostly outside Java, absorbed a huge amount of loans in the first half.
"It is good because the economy will have an even distribution, and banks may open business units in regions (outside Java) seeing the amount of loans there," Ryan said.
In the second semester, Ryan said lending would have a similar growth pattern as in the first half. "Most of the loans, in rupiah, will be channeled as, first, working capital loans; second, investment loans; and third, consumer loans."
As for growth in percentages, he said working capital loans would have the most growth, followed by consumer loans and investment loans.
Meanwhile, the high growth in lending in the first half was followed by strict and prudent risk assessments, BI said, as seen in the relatively low rate of nonperforming loans (NPLs).
Gross NPLs stood at 4.1 percent as of the end of June, slightly down from 4.3 percent in May, below the maximum tolerance of 5 percent set by the central bank. Net NPLs declined to 1.7 percent from 1.8 percent.