From the banking side, the annual growth rate of industrial credit is starting to increase in all economic sectors, but this needs to be addressed carefully. Credit growth in November 2023 was recorded to have increased to 9.7% yoy from 9.0% yoy in the previous month. However, this figure is lower than the position at the end of 2022 of 11.3% yoy. Even though credit growth is in a slowing phase, credit quality is relatively well maintained and stable. In December 2023, the gross value of Non-Performing Loans (NPL) was recorded to move steadily and was below 3%, namely 2.36%. Meanwhile, banking industry liquidity is increasingly limited amid policy tightening. Third Party Funds (DPK) growth slowed to 3.0% yoy in November 2023, from 8.9% yoy in the same period the previous year. TPF growth was expected to be increasingly limited due to BI’s tight monetary policy and people’s saving ability weakening. In the future, Indonesia’s economic growth is predicted to modestly slow. This is evident by monitoring the movement of indonesia’s LEI which has been decreasing and contracting. Apart from that, there was the threat of the El-Nino phenomenon which may support an increase in domestic inflation. The El-Nino period caused drought in various regions in Indonesia, which in turn could have an impact on food production activities, and lead to an increase in domestic inflation. This condition could negatively impact people’s pirchasing power in the short term, which could suppress national economic growth. However, in the short term there are several driving factors that could support national economic growth, including the potential for increased government spending to support slowing public consumption, the continuation of various infrastructure projects which were delayed due to the pandemic, the potential for domestic and foreign investment in the energy and commodity sectors, and the general election in 2024. With these various conditions, Indonesia’s economic growth was estimated to grow by 4.89%- 5.18% in 2023 and 4.81%-5.10% in 2024. Table 1. Realization of National Economic Indicators Indicator 2023 (latest data) 2022 2021 Economic Growth (yoy) 5.05% 5.31% 3.70% BI 7 Days rate 6.00% 5.50% 3.50% Inflation (yoy) 2.61% 5.51% 1.87% Exchange Rate (IDR/USD) 15,397 15,568 14,253 National Credit Growth 9.74% 11.35% 5.24% National TPF Growth 3.04% 9.01% 12.21% Gross Non-Performing Loans 2.36% 2.44% 3.00% Source : Bank Indonesia, CEIC, Bloomberg, SPI OJK November 2023 Banking Industry Analysis In the midst of high US interest rates and the belief that this condition will last longer than previously estimated, the Indonesian banking industry remains stable and resilient, supported by the Capital Adequacy Ratio (CAR) as of November 2023 at the level of 25.82%, an increase of 2, 40% compared to the same period in the previous year, indicating the adequacy of industry capital in facing global conditions which are characterized by VUCA, It is Volatility, Uncertainty, Complexity and Ambiguity. Apart from that, there is tightening liquidity in the banking industry as shown by the Loan to Deposit Ratio (LDR) in November 2023 of 84.78% or an increase of 5.18% compared to November 2022. In November 2023, total assets in the national banking industry was reached IDR 11,428 trillion or an increase of 5.1% yoy. The same trend occurred in commercial bank loans which grew 9.7% yoy to IDR 6,966 trillion. This shows that demand for credit in Indonesia is quite strong amidst economic and political uncertainty during the election era. The number of Covid-19 restructuring loans also continues to decline in line with national economic growth with credit quality remaining maintained with Non-Performing Loans (NPL) in November 2023 amounting to 2.36%, which is an improvement compared to November 2022 of 2.65%. Credit quality is currently controlled below the maximum level of 5% set by the regulator. Apart from that, Third Party Funds (TPF) also grew positively by 3.0% yoy to IDR 8,216 trillion. PT Bank Rakyat Indonesia (Persero) Tbk. 2023 Annual Report 195 Management Discussion and Analysis on Bank Performance
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