Highest-Ever Rate of Non-Performing Bank Loans

National banks' non-performing loans (NPLs) reached a record high. Based on data from the Indonesian Financial Services Authority (OJK)'s Indonesian Banking Statistics, bank NPLs reached Rp 186.16 trillion in July 2021.

This figure grew by 3.01% month-to-month (m-to-m) and increased by 4.35% year-on-year (yoy) compared to July 2020.

In terms of ratio, the national banks' gross NPL rose 11 basis points (bps) to 3.35% compared to the previous month. Total credit disbursed amounted to Rp 5.56 quadrillion in July 2021.

Based on usage type, the largest problematic loans were for working capital loans, totaling Rp 110.46 trillion or 4.38% of total credit disbursed. This was followed by investment loans at Rp 44.89 trillion (3.04% of total credit) and consumption loans at Rp 30.81 trillion (1.97% of total credit).

According to usage orientation, NPLs for export financing loans amounted to Rp 5.7 trillion (3.15% of total credit disbursed). NPLs for import financing totaled Rp 4.3 trillion (5.66% of total credit), and NPLs for other financing amounted to Rp 176.11 trillion (3.32% of total credit).

Social restrictions implemented to curb the spread of the coronavirus impacted almost all business sectors. This caused borrowers to struggle to meet their bank obligations due to disrupted income resulting from the COVID-19 pandemic.

Bank credit risk also increased to 22.66% in June 2020 compared to before the pandemic in December 2019, which was only 9.33%.