September 2017, Tier 1 Bank Loans Decreased by 36 Percent

The sluggish domestic economy and efforts to suppress non-performing loans have hampered credit expansion for small banks. Businesses have also been hesitant to take out loans, waiting for an improvement in consumer purchasing power. As a result, Group I Commercial Banks (BUKU I), both conventional and Islamic banks, experienced negative credit growth.

Data from the Indonesian Financial Services Authority (OJK)'s Banking Statistics show that credit for Group I commercial banks in September 2017 fell by 36.4 percent to Rp 40.85 trillion compared to September 2016 (YoY). This decline was the sharpest among all BUKU groups. Similarly, credit for Group I Islamic commercial banks also fell by 25.61 percent to Rp 11.52 trillion. Meanwhile, Group III commercial banks recorded credit growth of 19.8 percent, reaching Rp 2,266.35 trillion.

For information, banking credit in September 2017 grew by 7.86 percent to Rp 4,543.38 trillion from Rp 4,212.63 trillion in September 2016. Third-party funds (Dana Pihak Ketiga) in the banking sector grew by 11.69 percent to Rp 5,142.89 trillion from Rp 4,604.58 trillion.