Working Capital Credit Lending by BPD Banks Decreased Most Drastically in the First Half of 2022

Working capital loan interest rates recorded a decrease throughout the first half of 2022. The decrease in credit risk, along with the easing of the Covid-19 pandemic and the BI 7-Day Reverse Repo Rate (BI7DRR) at its lowest level of 3.5%, drove down working capital loan interest rates in the banking sector.

Based on Bank Indonesia (BI) data, the working capital loan interest rate for general banks decreased by 19 basis points (bps) to 8.4% in June 2022, compared to 8.59% in December 2021.

The following shows the decrease in working capital loan interest rates by bank group in June 2022 compared to December 2021:

* Regional Development Banks (BPD): -0.41%
* State-Owned Banks (Bank Persero): -0.20%
* General Banks (Bank Umum): -0.19%
* Foreign/Mixed Banks: -0.17%
* Private National Banks: -0.15%

Working capital loan interest rates for Regional Development Banks (BPD) recorded the largest decrease in the first half of 2022, a drop of 41 bps to 9.04% in June 2022 compared to 9.45% at the end of last year. Meanwhile, working capital loan interest rates for State-Owned Banks decreased by 20 bps to 8.14% at the end of the first half of 2022, compared to 8.34% at the end of last year.

Furthermore, working capital loan interest rates for foreign/mixed banks decreased by 17 bps to 5.52% in June of this year, compared to 5.69% at the end of last year. Similarly, working capital loan interest rates for private national banks decreased by 15 bps to 8.98% in June 2022, compared to 9.13% in December 2021.

Working capital loans from BPDs recorded the highest rates, while working capital loans from foreign/mixed banks recorded the lowest, as shown in the graph.

Bank Indonesia's increase in its benchmark interest rate, the BI7DRR, by 25 bps to 3.75% could hinder further decreases in banking sector working capital loan interest rates.