JAKARTA. Financial Service Authority (FSA) is optimistic that the banking performance of this year may be better than 2016. This prediction was made based on the projection on national and global economic growth.

Chairman of Commissioner Board of FSA Muliaman Darmansyah Hadad said, the improved performance will also be supported by tax amnesty program, infrastructure spending, and the improvement in commodities prices.

In referring to projection data of some institutions that were summarized by the FSA, Indonesia’s economic prospect in this year will be better. For an example, based on the surveys on 20 banks, the gross domestic product (GDP) growth and the inflation rate will be at 4.9%-5.6% and 3.25%-5%, respectively.

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The projections are not much different with the predictions of BI (the Central Bank) on GDP growth and inflation rate, which will be ranging at 5.1%-5.5% and 3%-5%, respectively.

International Monetary Fund (IMF) through 2017 World Economic Outlook, which was released in October 2016, predicts that Indonesia’s 2017 GDP growth and inflation rate will be 5.3% and 4.2%.

As of the end of quarter III 2016, Indonesia’s GDP growth was 5.02%.

In terms of banking sector, Muliaman said that this sector will have better prospect in 2017 than 2016. FSA predicts that the bank credit and third party funds will be growing at the ranges of 9%-11% and 10%-12%, respectively in this year.

The non-performing loan (NPL) rate will also decline, following the credit rise. The 2017 Banks’ Business Plan predicts that the NPL rate may stand at the level of 2.76%. This number is lower than the 2016 projection, which was 3.04%.

Muliaman is optimistic that the NPL rate in 2017 will be healthier. “The NPL burdens will have been covered with sufficient provision,” Muliaman said.

However, the RBB predicts that the capital adequacy ratio (CAR) will decrease from 22.14% (2016 projection) to 21.34% in this year.

As information, the bank credit allocation as of November 2016 has increased by 8.46% to Rp 4,285 trillion compared with the same period in 2015. The credit allocation was still dominated by investment credit (11.75%), consumer credit (7.39%), and working capital credit (7.34%).

Head of Economic Risk and Financial System Group at Deposit Insurance Agency (LPS) Dody Arifianto said, the NPL rate peaked in 2106. “In the future, the NPL rate tends to be flat or lower. I predict that the number will be ranging at 3.2%-3.4%,” Dody said. (Muhammad Farid/Translator)