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Jokowi's fears at the end of his mandate become real, bankers demand liquidity

Jokowi's fears at the end of his mandate become real, bankers demand liquidity


Jakarta, CNBC Indonesia – Towards the end of his term, President Joko Widodo (Jokowi) expressed concern about the increasingly dry flow of money, even though Indonesia's economic growth was still around 5%.

According to Jokowi, this problem is due to the fact that the Ministry of Finance (Kemenkeu) and BI issued too many instruments, namely Government Securities (SBN), Indonesian Rupiah Bank (SRBI) Securities and Securities in foreign currencies from Bank Indonesia (SVBI).

Jokowi's fears have now proven true. Liquidity is a major concern for bankers this year.

For information, Bank Indonesia increased its benchmark interest rate by 25 basis points (bps) to 6.25 percent at the April 2024 Board of Governors meeting.

In an environment of high interest rates that are expected to last for a long time, competition for funds is increasingly fierce. This was revealed by President Director of PT Bank Rakyat Indonesia (Persero) Tbk Sunarso.

“We are reacting to the increase in interest rates as a logical and rational decision. This remains a challenge that will certainly lead to liquidity problems,” he said during a recent presentation of the first quarter of 2024 performance .

Nevertheless, he assured that the BIS still had sufficient liquidity space for credit expansion.

“For the BRI which has so many LDRs, yes, we are normal in the sense that we will definitely maintain the LDR, but that does not mean that we are curbing credit,” Sunarso added.

For information, in March 2023, the credit-to-deposit ratio (BIS) was 83.78%. Compared to the same period last year, this figure decreased by 148 basis points (bps).

Separately, CFO of PT Bank Negara Indonesia (Persero) Tbk Novita Widya Anggraini said liquidity was one of the two main goals this year.

In maintaining liquidity, he said, BNI is consistently prioritizing increasing low-cost funds (CASA) by optimizing digital services such as BNI Mobile Banking for retail customers and BNI Direct for businesses .

“With a strategy focused on strengthening liquidity, optimal asset allocation and strategic financing pricing, BNI believes that performance will remain stable in the face of challenges while being able to optimize opportunities to deliver the best value to customers. customers and stakeholders,” he said.

In March 2024, BNI's LDR increased by 358 basis points, from 85.43% to 89.01%.

Meanwhile, PT Bank Tabungan Negara (Persero) Tbk revised its credit growth target this year. Napitupulu, chairman and director of NIxon LP, said this was done due to lack of liquidity in the market.

“So why are we aiming for the same credit as last year, given that DPK can still face tight competition. But if we see that the financing situation is good, we will push for an upward revision “But if you look at the situation today, we're not being too bold in aiming for more than 12%,” Nixon said earlier this year.

Aside from that, Nixon said, the rate of credit growth this year needs to be limited to mitigate the risk of rising interest rates.

“Quarter I/2024 (credit growth) 14.85% (yoy), later we will reduce credit distribution to the level of 10% (yoy) in anticipation of expensive funds as interest rates are now more difficult.

“It’s as if, with the high price of raw materials, there is no need to increase sales,” he said.

In March 2024, the LDR of the bank which focuses on home ownership loans (KPR) increased by 244 basis points to 96.23%. For information, Bank Indonesia provides LDR recommendations between 84% and 94%.

Look for alternative sources of financing

The Deposit Insurance Corporation (LPS) noted that the growth rate of non-DPK funds increased again, after slowing down in the middle of last year. In February 2024, this bank financing alternative increased by 5.38% year-on-year.

The annual growth of non-TPF funds was mainly contributed by an increase in loans/financing received amounting to IDR 25.29 trillion and other bank liabilities amounting to IDR 11.88 trillion.

“This development is in line with the bank's strategy to diversify liquidity sources. Access to non-DPK financing sources is one of the sources to fill the financing gap in a context of lower growth in the TPF versus credit,” citing March 2024 financial market indicators.

In the second month of this year, bank deposits increased by 7.4% year-on-year, while credit increased by 12.4% year-on-year.

[Gambas:Video CNBC]

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