Banking statistics recorded that banks' allowance for credit losses (ACL) in 2016 reached Rp 153.25 trillion. This figure surged by 31.5 percent compared to the previous year's Rp 116.54 trillion. Several banks increased their ACL as a consequence of the rise in non-performing loans (NPLs).
The sluggish domestic economy, a result of the global slowdown, triggered the increase in banks' loss provisions throughout 2016. Bank lending to third parties in 2016 grew by only 7.87 percent to Rp 4,377.2 trillion. Meanwhile, non-performing loans increased by 26.95 percent to Rp 128.14 trillion. The gross NPL ratio also rose to 2.93 percent at the end of 2016 from 2.49 percent the previous year.
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