OJK Urges Banking Sector to Remain Cautious of Credit Risk
- Website OJK
Jakarta – The Financial Services Authority (OJK) urges banking sector to be aware of the high global interest rates, against the potential increase in credit risk after the end of the relaxation period for Covid-19 credit restructuring.
OJK Banking Supervision Executive Head, Dian Ediana Rae asked banks to pay attention to market risk which has an impact on liquidity risk.
"It's necessary to pay attention to banking risks, especially market risk and its impact on liquidity risk related to high global interest rate sentiment, as well as the potential increase in credit risk after the end of the credit restructuring relaxation period related to Covid-19 at the end of March 2024," Rae said in a statement here on Tuesday.
Kepala Eksekutif Pengawas Perbankan Otoritas Jasa Keuangan (OJK) Dian Ediana Rae.
- VIVA/Anisa Aulia
Therefore, Rae asked banks to increase resilience through strengthening capital and maintaining the adequacy of the Reserve for Impairment Losses (CKPN).
"Banks are asked to increase their resilience through strengthening capital and maintaining adequate CKPN coverage, as well as routinely conducting stress tests to measure the ability of capital to absorb potential risks," Rae explained.
The performance of the Indonesian banking industry as of February 2024 remained resilient and stable, supported by the level of ROA profitability of 2.52 percent, and NIM of 4.49 percent. Then high banking capital (CAR) of 27.72 percent, from January 2024 which amounted to 27.52 percent.
Rae added, in terms of intermediation performance, in February 2024, month to month (mtm) credit increased by IDR 36.96 trillion, or grew 0.52 percent month to month.
On an annual basis, credit again recorded double-digit growth of 11.28 percent year on year (yoy) to IDR 7,095 trillion.
"This growth was mainly driven by working capital loans which grew 12.04 percent yoy, while in terms of bank ownership, state-owned banks were the main drivers of credit growth which grew 13.62 percent yoy," he explained.
Meanwhile, Third Party Funds (DPK) also experienced positive growth, both on a monthly and annual basis. In this case in February 2024, DPK was recorded to grow 0.30 percent mtm or increased 5.66 percent yoy or to IDR 8,441 trillion.
He said the liquidity of the banking industry in February 2024 was adequate with the ratio of Liquid Tools/Non-Core Deposits (AL/NCD) and Liquid Tools/Third Party Funds (AL/DPK) at 121.98 percent and 27.41 percent, respectively.
These figures are well above the thresholds of 50 percent and 10 percent respectively.
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