BANK CREDITS PREDICTED TO GROW 24 PCT IN 2011

By Andi Abdussalam

Jakarta, Dec 17 (ANTARA) -  Indonesia's central bank or Bank Indonesia (BI) has predicted that bank credits --which up to the middle of November this year reached Rp1,664.2 trillion-- will increase by about 24 percent in 2011.          The increase in bank credits next year is expected to help stimulate economic activities, boost the real sector and fuel  economic growth next year.          "With the prediction that economic growth in 2011 will  be the same as this year, credit growth in 2011 has the potential to reach a level between 20 and 24 percent," BI Deputy Governor Muliaman D Hadad said.          With 2010 coming to its conclusion, BI has noted that the banking community's performance in fulfilling its intermediary role - extending credit to business or industry - has continued to improve. In the second week of December, its credits increased by Rp7.06 trillion.          He said that  third-party funds (DPK) were also expected to increase by about 15 to 20 percent next year as  bank credit growth would follow economic growth in 2011 which was expected to be at a range of between 6 and 6.5 percent.          In the second week of December 2010, banks collected DPK funds amounting to Rp19.61 trillion.          Head of BI's Public Relations Bureau Difi A Johansyah said on Tuesday that this year, banks had provided year-on-year (yoy) credits amounting to Rp316.54 trillion or 22.87 percent. They had also collected yoy DPK funds valued at Rp323.38 or 17.26 percent.          Earlier, up to the middle of November, banks in the country provided credits worth Rp234.08 trillion, or an increase by 16.37 percent while in the same period in 2009 credits provided had reached Rp299.32 trillion or 21.93 percent.          In the fifth week of November, banks provided credits worth Rp10.47 trillion and collected third party funds (DPK) amounting to Rp18.47 trillion.          "Based on year-to-date (ytd) records the credit provision in the third week of November increased by 17.44 percent while based on the year-on-year (yoy)  it rose by 22.11 percent," Difi A Johansyah.          The same is true to the third party funds collected by banks. They increased 10.91 percent ytd and 17.35 percent yoy up to the middle of November.          At the end of November, credits' basic interest rate (SBDK) for rupiah dropped significantly by nine basis points (bps) while the average interest rate of one-month deposit increased by one basis point so that the spread of the rupiah interest rate decreased from 5.54 percent to 5.44 percent.          Global uncertainties have led foreign investors at the end of November to take the wait-and-see position triggering outflows of foreign funds again. Foreign funds invested with the rupiah assets decreased by Rp5.11 trillion, namely Rp2.64 trillion in the Bank Indonesia Certificates (SBI), Rp1.22 trillion in the state debentures (SUN) and Rp1.25 trillion in the foreign stake net sales.              The latest developments reduced foreign ownership in the SBI from 30.2 percent to 28.78 percent and in the SUN from 30.46 percent to 30.26 percent. The credit provision of Rp10.47 trillion in the fifth week of November consisted of RP3.93 trillion in rupiah and Rp6.54 in foreign currencies.              In the report week, credits in rupiah increased at almost all bank categories, except at the mixture bank category, which experienced a drop of Rp0.83 trillion. The biggest increase in rupiah credits took place with banks of the private and partnership categories respectively amounting to Rp2.38 trillion and rp1.75 trillion.              In the meantime, the increase in foreign currency credits took place at banks of almost all categories where the highest ones took place with partnership banks worth Rp3.26 trillion and with branches of foreign banks valued at Rp1.97 trillion.              In the foreign currency denomination, banks' foreign currency credits increased US$680 billion in the last week of November.              Third party funds (DPK) increased by Rp18.47 trillion particularly due to the increase in the DPK in the rupiah currency by Rp16.0 trillion while foreign currency DPK only increased by Rp2.47 trillion.              This growth brought the DPK to the amount of Rp214.91 ytd (10.91 percent) and Rp323.06 trillion (17.35 percent) yoy.              BI recorded that up the end of November 2010, the credit growth reached 21.8 percent yoy.  Capital working credits were increasingly accelerated. Ahead, credits would continue to be directed to the productive sectors. With that developments and based on banks' business plan, the overall banks' credits in 2010 are expected to grow by about 22 to 24 percent.          Muliaman D Hadad said that the challenges that would be faced by banks in 2011 included the impact of global economic crisis. In facing this fact, banks should maintain their financial resilience and stability.          The central bank itself also has the task of maintaining financial stability because it is related to its responsibility to maintain monetary stability, BI Deputy Governor Halim Alamsyah said meanwhile.         As regards, the government is planning to establish a Financial Service Authority (OJK) at the end of this year. The OJK would be the sole agency with the power  to supervise all financial institutions in Indonesia.      (T.A014/A/HAJM/16:45/a014) 17-12-2010 16:48: