"Credit growth is still optimistic at an average of 24 per cent while credit demand rises in line with economic growth and, therefore, banks need to continue to strengthen their capital and liquidity," Bank Indonesia deputy governor Muliaman D Hadad said in an `anti-fraud` seminar here on Wednesday.
According to data from the central bank, until December 2011 total credits distributed by the country`s banks reached Rp2.200 trillion or rose by 24.5 per cent consisting of credits for working capital Rp1,068, up by 21.41 per cent, investment credits Rp464 trillion, up by 33.21 per cent and consumer credits Rp667 trillion, up by 24.21 per cent.
"So, 2012 might see many banks conducting initial public offering of stocks or rights issue to assure capital for credit distribution," he said.
Muliaman denied that the planned rise of subsidized oils would cut credit distribution.
"The oil price hike will indeed increase inflation that will affect economic growth, but we are still calculating the impact of the hike and if that happens the impact will not be too big," he said.
He admitted that the prime lending rate had dropped but he did not mention figures.
UBS Indonesia Country Head Rajiv Louis was optimistic on Tuesday that bank credit growth in Indonesia would reach 20 to 25 per cent.
"To achieve the growth a lot of capital would be needed. I think the country`s 10 biggest banks would conduct a rights issue or sell bonds to increase their capital this year," he said.
He suggested that their yield would be close to that of the 10-year government bonds. The yield of one-year state-owned companies` bonds right now stands at 5.74 per cent.
"On average, the rights issue now is reaching 22 to 23 per cent. Actually many government banks are interested in increasing their capital but to do that they must have a permit from the House of Representatives, and so perhaps the Financial Service Authority would later regulate how a rights issue of over 20 per cent could be done without a permit from the House," Rajiv said.
Several state-owned banks have set a target of credit growth at 25 per cent for this year and also plan to conduct rights issue this year.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2012
