BI Records Slow Loan Growth in Q1, Projects Faster in Q2

BI Records Slow Loan Growth in Q1, Projects Faster in Q2

The Bank Indonesia (BI) logo. (Shutterstock.com/Harismoyo )

A Bank Indonesia survey has shown slow growth in loan demand in the first quarter of 2019, but the central bank projects faster growth in the second quarter.

This is reflected in the net weighted balance (SBT) – an indicator used to project business sentiment – of new credit demand, which was only at 50 percent in the first quarter compared to 71.7 percent in the previous quarter, according to the result of the survey.

BI said the loan demand for working capital, as indicated by the SBT, decreased to 68.2 percent in the first quarter from 77 percent in the previous quarter, and loan demand for investment decreased to 74.7 percent from 83.1 percent.

Meanwhile, loan demand for consumption increased to 30.4 percent from 28 percent. “The growth in demand for consumption loans was supported by the disbursement of loans for vehicle ownership,” BI said in a press statement recently.

The low demand for credit was most noticeable in the transportation, warehouse, communication, retail and wholesaler, food and beverage and accommodation sectors.

BI expected new credit disbursement to grow faster in the second quarter in line with the annual circle. This is reflected by the SBT of new credit demand, which is at 98.6 percent.

Respondents said the faster growth in loan demand would be triggered by strengthened economic growth, lower risk of loan disbursement, adequate liquidity and a better capital liquidity ratio, according to the BI survey.

“Respondents’ first priority for new credit in the second quarter of 2019 will be working capital, followed by investment and consumption,” the BI report stated, adding that loans for house and apartment ownership and vehicle ownership would be the main contributors to the increase in consumption credit. (mai/bbn)

Source“TheJakartaPost”

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