BANKING SURVEY * Estimation. Methodology

Transcription

1 Y jg brg dia BANKING SURVEY QUARTER IV-217 BANKS PREDICTED NEW LOAN GROWTH TO ACCELERATE IN 218 Respondents of the Bank Indonesia Banking Survey reported stronger growth of new loans in the fourth quarter of 217, as reflected by a bump in the weighted net balance (WNB) of demand for new loans from 77.9% last period to 94.3%, consistent with seasonal and non-seasonal factors in the form of increasing demand and supply of credit. On the demand side, the construction sector registered the largest increase in demand for new loans. Greater supply, however, was demonstrated by an aggressive promotional campaign to supply loans coupled with lower lending rates, reflecting bank policy to ease lending standards in the fourth quarter of 217. Nevertheless, the banks remained prudent when disbursing loans, as evidenced by a rising percentage of rejected loan applications from 18.1% in the previous period to 21.7%. Despite expanding, respondents predicted quarterly new loan growth to decelerate in the new year, as reflected by a dip in the WNB of demand for new loans to 92.8%. More lending was anticipated in the first quarter of 218, supported by the banks further easing lending standards, as indicated by a decline in the Lending Standards Index from 14.4 to.9 in the fourth quarter of 217. Looser lending standards will primarily be achieved through lower lending rates, longer loan maturity and lower credit approval fees. The respondents predicted the average lending rate to decline in the first quarter of 218 for nearly all loan types. The banks anticipated a 5bps drop in the average lending rate on working capital loans to 12.24% and an 8bps decline in the average rate on consumer loans to 15.8%, while pre-empting a 2bps bump in the average rate on investment loans to 11.89%. The Banking Survey respondents were upbeat that credit growth could reach 11.8% (yoy) in 218, up from 7.7% (yoy) in 217 (as of November). Such optimism stemmed from the economic improvements expected in 218, along with lower lending rates, easing credit risk and less liquidity risk in the banking system. CONDITIONS IN QUARTER IV-217 The banks reported stronger growth of new loans in the fourth quarter of Graph 1. New Growth The respondents reported stronger quarterly growth of new loans in the final quarter of 217, consistent with cyclical trends, as reflected by a bump in the WNB of demand for new loans from 77.9% last period to 94.3% (Graph 1). The gain was induced by growing -2. demand for lower lending rates and an aggressive promotional -4. campaign to supply loans. Despite stronger * Estimation demand, the banks remained selective when approving prospective borrowers, indicated by a rising percentage of rejected loan applications from 18.1% in the previous period to 21.7% (Graph 2). (%, WNB) (%, qtq) I II III IV I II III IV I* WNB New Growth (qtq) - Banking Survey (LHS) New Growth (qtq) - Realization (RHS) Methodology The Banking Survey (previously the Bank Loan Survey) has been conducted quarterly since Quarter III-1999 in order to collate early information concerning banking policy in the disbursement of credit, funding and setting interest rates, the supply and demand of new loans as well as to collate comprehensive banking information that is unavailable through the Monthly Reports of Commercial Banks (LBU). The sample is selected using purposive sampling of 42 commercial banks with head offices in Jakarta and a credit share accounting for around 8% of the national total. Data is processed using the net weighted balance method, namely that the answers provided by respondents are multiplied by their respective credit weighting (totalling %), with the difference between the percentage of respondents whose answers increased and those whose answers decreased subsequently calculated. Real Sector Statistics Division 1

2 (%) Graph 2. Percentage of rejected loan applications I II III IV I II III IV Graph 3. Cars and Motorbikes Sales (Thousand unit) (Thousand unit) I II III IV I II III IV I II III IV* Cars (RHS) * Sales average on October-November 217 Motorcycles (LHS) Source: AISI, GAIKINDO (diolah) The banks confirmed stronger demand for all loan types in the fourth quarter of 217, with the WNB of working capital loans increasing from 71.1% to 84.3%, WNB of investment loans increasing from 69.8% to 84.2% and the WNB of consumer loans from 2.5% to 35.% (Table 1). Credit cards, housing loans and automotive loans were the main drivers of demand for consumer loans. Automotive loans expanded on rising sales of cars and motorbikes in the reporting period (October-November) (Graph 3). Demand for new loans from 12 economic sectors was confirmed to increase in the fourth quarter of 217, particularly from the construction sector, which experienced a 38.7% gain in the WNB on the previous period to 8.8%, followed by the agricultural, hunting and livestock sector (WNB up 25.7%) and the financial intermediary sector (WNB up 23.7%). Based on usage orientation, the respondents acknowledged stronger demand for export loans, with the WNB doubling from 27.8% to 56.6%, contrasting the demand for import loans, which slowed as the WNB fell from 2.9% to just 7.4% (Table 1) Type of Based on Consumer Economic Sectors Debtors Orientation Table 1. Classification of Demand for New (WNB, %) in Detail 217 I II III IV IV - III Working Capital Investment Consumer Housing/ Property Motor Vehicles Credit Card Multi Purpose Non-collateral loans Agriculture, Hunting and Forestry Fishing Mining and Quarrying Manufacturing Electricity, Gas and Water Construction Wholesale and Retail Trade Accomodation, Food and Baverage Services Activities Transportation, Storage and Communication Financial Intermediaries Real Estate, Leasing and Company Services Activities Government Administrative, Defence and Compulsory Social Security Educational Services Health Services and Social Work Activities Public Services, Social Cultural, Entertainment and Personal Act Personal Services Serving Households International Agencies and Other Extra International Organization Activities that Undefined Micro Small and Medium Enterprises (Cummunal Business Credit) Micro Small and Medium Enterprises (Non Cummunal Business Credit) Non Micro Small and Medium Enterprises Export Import Other TOTAL Real Sector Statistics Division 2

3 Table 2. Percentage of Respondents Who Have New Realization Below the Target (Deviation >5%) Type of Based on Consumer Economic Sectors* Debtors Orientation in Detail 217 I II III IV IV - III Working Capital Investment Consumer Housing/ Property Motor Vehicles Credit Card Multi Purpose Non-collateral loans Agriculture, Hunting and Forestry Manufacturing Accomodation, Food and Baverage Services Activities Transportation, Storage and Communication Real Estate, Leasing and Company Services Activities Micro Small and Medium Enterprises (Cummunal Business Credit) Micro Small and Medium Enterprises (Non Cummunal Business Credit) Non Micro Small and Medium Enterprises Export Import Other TOTAL * 5 economic sectors that recorded the most deviation in last quarter Congruent with growing demand for new loans, the percentage of respondents who failed to meet their target for new loans declined from 77.5% to 62.5% in the fourth quarter of 217, affecting all loan types, especially working capital loans (Table 2). In terms of consumer loans, however, stronger demand for automotive loans reduced the number of banks failing to hit their target for new loans in the reporting period. PREDICTION FOR QUARTER I-218 Respondents predicted new loan growth to decelerate in the new year. Respondents confirmed their plan to further ease lending standards in the first quarter of 218. Table 3. Priority of New Disbursement Type of Based on Consumer Economic Sectors Debtors in Detail Triwulan Tahun IV-17 I Working Capital Investment Consumer Housing/ Property Motor Vehicles Non-collateral loans Manufacturing Wholesale and Retail Trade Graph 4. Bank Lending Policy Financial Intermediaries Real Estate, Leasing and Company Services Activities MSME (Cummunal Business Credit) MSME (Non Cummunal Business Credit) Non Micro Small and Medium Enterprises Export Import Orientation Other Looser Tighter I II III IV I II III IV I* * Estimation Predictions for Despite expanding, respondents predicted quarterly new loan growth to decelerate in the new year, as reflected by a dip in the WNB of demand for new loans from 94.3% to 92.8% (Graph 1). Despite the slowdown, the WNB in the first quarter of 218 still exceeded that posted in the same period in 217 (52.9%) and 216 (31.3%). The banks attributed the robust performance to solid economic growth, planned reductions to lending rates and easing credit risk. The survey respondents confirmed that the banking industry would continue to prioritise working capital loans in the first quarter of 218, particularly targeting the wholesale and retail sector, manufacturing industry and financial intermediaries (Table 3). In terms of consumer loans, however, the automotive loans and non-collateral loans in the first quarter of 218. Consistent with more lending anticipated in the first quarter of 218, the banks stated their intention to further ease lending standards, as indicated by the Lending Standards Index of.9, down from 14.4 in the fourth quarter of 217 (Graph 4). Looser lending standards will primarily be achieved through lower lending rates, longer loan maturity and lower credit approval fees. 1 The The Bank Lending Policy Index is calculated using the weighted net balance (WNB) based on the credit weight of each respondent to total credit and the weight of the response (Tighter (1), Slightly Tighter (.5), Unchanged (), Slightly Looser (-.5) and Looser (-1)), with a minimum WNB of - and maximum of. A WNB value > indicates tighter lending policy, WNB = is unchanged and WNB < indicates looser lending policy. Real Sector Statistics Division 3

4 Table 4. Prediction for Deposits Growth Bank Large Banks Medium Banks Small Banks Total Type of Deposit Triwulan Tahun IV-17 I Demand Deposit Saving Deposit Time Deposit Total Demand Deposit Saving Deposit Time Deposit Total Demand Deposit Saving Deposit.... Time Deposit.... Total.... Demand Deposit Saving Deposit Time Deposit Total Graph 5. Funds Interest Rate in Rupiah (%, per annum) (%, per annum) Graph 6. Loan Interest Rate in Rupiah (%, per annum) Demand Deposit (LHS) Time Deposit (RHS) Predictions for Deposits The respondents predicted slower deposit growth in the first quarter of 218, evidenced by a decrease in the WNB of deposit growth from 91.4% to 6.% (Table 4). The banks expected the slump to hit all deposits due to a build-up of liquidity risk in the banking industry compared to conditions in the previous period. Predictions for Funding and Lending Rates Respondents predicted the average cost of funds (CoF) in rupiah to remain stable at a level of 5.77%. In contrast, the cost of loanable funds (CoLF) was expected to climb 2bps to 9.26% (Table 5). The respondents predicted the average lending rate to decline in the first quarter of 218. The banks anticipated a 5bps drop in the average lending rate on working capital loans to 12.24% and an 8bps decline in the average rate on consumer loans to 15.8%, while pre-empting a 2bps bump in the average rate on investment loans to 11.89% (Table 5). In terms of consumer loans, lower lending rates were expected to affect all loan types, particularly credit cards (-18bps), followed closely by multipurpose loans (-17bps) and then housing loans (-5bps). In accordance with the expected 11bps rise in the cost of loanable funds (CoLF) denominated in USD in the first quarter of 218, the banks predicted the interest rate on USD working capital loans and consumer loans to increase by 2bps and 15bps respectively. On the other hand, the respondents predicted a 2bps decline in the lending rate on investment loans in the same period. Table 5. Funds and Interest Rates (Rupiah and USD) Real Sector Statistics Division Saving Deposit (LHS) Total Deposit (RHS) Source: Bank Indonesia Working Capital loans (LHS) Consumer loans (RHS) FUND A. In Rupiah : INTEREST RATE 1) Investment loans (LHS) Total (LHS) Source: Bank Indonesia Changes Quarter IV-217 2) Quarter I-218 3) Tahun 218 4) (I-18) - (IV-17) Survey Quarter IV-217 Average Range Average Range Average Average Range 1. Cost of Funds 5.77% 3.95%-7.6% 5.77% 4.7%-7.47%.% 5.75% 4.9%-7.42% 2. Cost of Loanable Funds 9.24% 6.25%-12.22% 9.26% 6.29%-12.22%.2% 9.21% 6.17%-12.24% B. In USD: 1. Cost of Funds 1.58%.56%-2.6% 1.69%.55%-2.84%.11% 1.78%.62%-2.93% 2. Cost of Loanable Funds 3.77% 1.6%-5.94% 3.88% 1.51%-6.25%.11% 4.25% 1.3%-7.21% LOAN A. In Rupiah : 1. Working Capital loans 12.29% 9.3%-15.55% 12.24% 9.7%-15.42% -.5% 12.17% 9.1%-15.32% 2. Investment loans 11.87% 9.74%-14% 11.89% 9.79%-13.98%.2% 11.75% 9.41%-14.8% 3. Consumer loans 15.16% 9.84%-2.49% 15.8% 9.78%-2.39% -.8% 15.% 9.81%-2.38% B. In USD: 1. Working Capital loans 6.1% 3.97%-8.5% 6.3% 4.2%-8.4%.2% 6.5% 4.7%-8.3% 2. Investment loans 6.49% 3.46%-9.53% 6.47% 3.46%-9.47% -.2% 6.5% 3.52%-9.48% 3. Consumer loans 7.65% 5.4%-.26% 7.8% 5.21%-.39%.15% 8.25% 5.29%-11.21% C. Consumer In Rupiah : 1. Housing/ Property 11.83% 9.55%-14.11% 11.78% 9.53%-14.2% -.5% 11.76% 9.53%-14% 2. Motor Vehicles 13.29% 8.68%-17.9% 13.26% 8.65%-17.88% -.3% 13.24% 8.63%-17.86% 3. Credit Card 22.77% 14.76%-3.79% 22.59% 14.63%-3.55% -.18% 22.57% 14.58%-3.56% 4. Multi Purpose 15.18%.6%-2.31% 15.1%.19%-19.84% -.17% 14.72% 9.86%-19.58% 5. Non-collateral loans 21.7% 12.9%-29.24% 21.3% 12.98%-29.8% -.4% 2.65% 12.2%-29.28% Note: 1) The average is a simple average of the interest rate of fund/loan 2) Interest rate of fund/loan in quarter IV-217 is realization number from Banking Survey respondents 3) Interest rate of fund/loan in quarter I-218 is expectation number from Banking Survey respondents 4) Interest rate of fund/loan in 218 is expectation number from Banking Survey respondents

5 PREDICTIONS FOR 218 Respondents predicted credit growth in 218 at 11.8% (yoy). Graph 7. Predictions for Growth (% yoy) Estimation 218 (Nov) Predictions for Respondents were upbeat that credit growth could reach 11.8% (yoy) in 218, up from 7.7% (yoy) in 217 (as of November). Such optimism stemmed from the economic improvements expected in 218, along with lower lending rates, easing credit risk and less liquidity risk in the banking system. Realization Survey Quarter IV-217 Graph 8. Predictions for Deposits Growth (%, WNB) (%, YOY) Predictions for Deposits The survey respondents predicted rising deposit growth to slow in 218, with the corresponding WNB falling from 9.3% to 63.1% (Graph 8). The banks cited milder liquidity risk in the banking industry and lower funding rates for slower credit growth (Nov) 218 Realization Deposit Growth (RHS) WNB Deposit Growth Estimation - Banking Survey (LHS) 4 Real Sector Statistics Division 5

6 Box: The Financing Policy of Islamic Banks Looser Tighter Graph 9. Islamic Bank Lending Policy Total Bank.9 IV-217 I-218 Graph. Islamic Bank Lending Policy Based on Investment Graph 11. Aspects of The Change on Islamic Bank Lending Policy Credit line Collateral Credit Insurance Agreement Duration Administration requirement Approval fee Interest loan Working Capital Islamic Bank Housing/ Property IV-217 I IV-217 I Consumption (excl. Housing) In November 217, total financing disbursed by the Islamic banking industry reached Rp277.6 trillion, accounting for around 6.% of the total credit disbursed by commercial banks. In the same period, financing growth at Islamic banks stood at 15.% (yoy), up slightly on the 14.9% recorded one year previously. In the fourth quarter of 217, the Islamic Bank Lending Standards Index was recorded at 8.3, implying that tighter lending standards had been applied compared to the previous period (index > ). Nevertheless, the lending standards index of Islamic banks was lower than the 14.4 recorded for conventional commercial banks, indicating that Islamic banks generally applied looser lending standards. In the first quarter of 218, Islamic banks applied the same lending standards as in the previous period, corroborated by a stable Index of 8.3 (Graph ). The Lending Standards Index for most types of financing were similar to the previous period, with the exception of housing financing, for which the corresponding index was observed to decline from 4.3 to 2.7 in the first quarter of 218. Islamic banks confirmed their plan to ease lending standards on profit-sharing financing, indicated by a decline in the index from -1.6 in the previous period to (Graph 11). In addition, policy relating to financing maturity and financing requirements were also expected to be eased compared to conditions in the fourth quarter of 217, with the corresponding indexes decreasing from 4.3 to and from 2.3 to.7 respectively. Islamic banks are expected to ease lending requirements based on improving economic dynamics, less financing risk and plans to bolster the capital base Looser Tighter accounting for an 88.9% share of total financing in the Islamic banking industry. The data was processed using the weighted net balance (WNB) method based on respondent weights and answers (Tighter (1), Slightly Tighter (.5), Unchanged (), Slightly Looser (-.5), Looser (-1), with a minimum WNB value of - and a maximum of +. A WNB > implies tighter lending standards, WNB = implies unchanged lending standards and WNB < implies looser lending standards. Real Sector Statistics Division 6