BANKS' INTERMEDIARY ROLE INCREASING

By Andi Abdussalam

Jakarta, Dec 6 (ANTARA) - The banking community's performance in fulfilling  its intermediary role - extending credit to business or industry - has improved  and the trend is expected to continue next year.          Up to the middle of last month, banks in the country  provided credits worth Rp234.08 trillion, or an increase by 16.37 percent if compared with the same period in 2009 when the figure was Rp299.32 trillion.          This year's credit provision of Rp234.08 trillion brings the total of banks' credit commitment to Rp1,664.2 trillion up to the middle of last November.          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, spokesman of Bank Indonesia (BI/the central bank), said over the weekend.          The same is true to the third party funds collected by banks. They increased 10.91 percent ytd and 17.35 percent yoy.         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.          In the meantime, credit growth next year is expected to reach 24 percent. "With the prediction that the economic growth in 2011 would be the same as the growth this year, the credit growth in 2011 has the potential to reach a level between 20 and 24 percent," BI Deputy Governor Muliaman D Hadad said on Sunday.          He said that the third party funds were also expected to increase by about 15 to 20 percent as the bank credit growth would follow the economic growth in 2011 which was expected to be at a range of between 6 and 65 percent.          Inflation is expected to be at a range of 4 to 6 percent, or similar to the target that has been set. Muliaman 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.          Banks are also challenged to increase their intermediary roles, particularly in providing credits for micro, small and medium scale businesses (UMKM). Credits to UMKM are expected to boost economic growth and increase public access to the banking services.           In the meantime, bank BNI Director for international affairs Adi Setianto said his bank had set itself a target of a 30 percent increase in its credit provision scheme that would be channeled to the consumption sector in 2011.          "Looking at Indonesia's demography where the number of its productive population is high, we have the courage to provide bigger volumes of credits for the consumption sector," he said.          He said that the largest portion of the consumption credit would be provided for the housing sector, particularly for debtors who would own houses for the first time. "We will also set a fund of Rp5 trillion for infrastructure credits," he added.          Adi Setianto said competition in the banking sector was not a matter of how big interest rates they would impose on their credits but on how convenient the services would be felt by their clients when they were involved in a bank transaction. "Competition is more on efficient procedures, not on the interest rates. We cannot compete in the pricing matter because banks set set almost the value," he said.***2*** (T.A014/A/HAJM/12:40/A/O001) 06-12-2010 13:04: