Jakarta (ANTARA News) - Bank Indonesia predicted slowdown in the bank credits saying credits are expected to grow only 8-10 percent year-on-year in 2016.

The prediction is more conservative compared with its earlier prediction putting credit growth higher than 10 percent.

Senior Deputy Governor of the central banks Mirza Adityaswara said the new prediction was based on performance in the first five months of this year when bank credits grew only 0.3 percent on-year.

"It would be difficult to reach a growth rate of 12 percent. The likeliest level is 8-10 percent," Mirza said here on Tuesday night.

However, Mirza said he was optimistic in the second half of the year, credit demand for and supply would grow and could make up for the slowdown in the first semester of the year.

Stronger growth was expected in the second semester of this year on relaxation in macro monetary policy with the increase in the minimum limit of Loan to Funding Ratio (LFR) to 80 percent from 78 percent earlier and relaxation in Loan To Value (LTV) ratio for housing credit to 85 percent from 80 percent earlier .

The macro prudential policy is expected to boost demand for credits, Mirza said.

"In the third and fourth quarters credit demand is expected to increase but it would be difficult to hit a 12 percent growth," he said.

He said the central bank is still studying the possibility of similar policy in credits for motor vehicles.

The central bank has maintained the minimum limit of advanced payment, considered too high, for the purchase of motor vehicles with credit to curb rising trend in non performing loan prevent in the sector.

The central bank also wants to see how fast banks could adjust to the relaxation policy of the central bank in LTV and LFR, he said.

Early this year, the central bank predicted that bank credits would grow 12-14 percent this year, but realization so far fell short of the target.

In April, bank credits grew 8 percent year-on-year, slower than 8.7 percent in March.

In 2009, when the investment bank of Lehman Brothers collapsed triggering big turbulence in the global financial market, bank credits from December, 2008 to May 2009 was stagnant in Indonesia. However, in the second half of 2009, improvement was recorded with growth of around 10 percent.

(T.SYS/A/H-ASG/A/H-YH)

Editor: Aditia Maruli Radja
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