Corporate Loan Demand Slowed in August 2022

Bank Indonesia (BI) survey reports that demand for corporate credit or financing grew positively, although it slowed from the previous month. BI recorded corporate financing demand in August as 17.9 percent lower than July 2022's 20.5 percent.

SBT (Survey Balance of Total) represents the responses from BI's survey respondents multiplied by their credit weight, then the difference between the percentage of respondents answering "increased" and "decreased" is calculated.

BI's Head of Communication Department, Erwin Haryono, stated that financing needs are primarily met with internal funds, followed by the utilization of overdraft facilities.

"Meanwhile, financing sourced from domestic bank loans shows an indication of increase," he said on Friday (September 16th).

The corporate slowdown was driven by a slowdown in financing needs, including in the agricultural, trade, and information and communication technology sectors. According to BI, this is due to the impact of reduced operational activities caused by weak domestic demand.

Meanwhile, new credit disbursement by banks in August 2022 indicated higher growth than the previous month, in line with indications of increased corporate financing demand from domestic banks. Based on the survey, the main factors influencing the forecast of new credit disbursement are customer financing demand and the prospects for future monetary and economic conditions. Meanwhile, for the entire third quarter of 2022, the supply of new credit disbursement is also projected to grow positively, although slightly slower than the previous quarter.

On the household side, the demand for new financing indicated relative stability in August 2022. The majority of households chose commercial banks as the primary source of additional financing, with the majority of financing requests being for Multi-Purpose Loans. Other financing sources preferred by respondents to meet their financing needs include cooperatives and leasing companies.