JAKARTA. Some bankers are optimistic that the amount of impairment loss reserve for covering non-performing loan (NPL) will decline, following the improvement in NPL ratio. This will subsequently contribute to banks’ performance improvement in the fourth quarter of 2016.

The optimism was driven by the decrease on the impairment loss reserves (CKPN) growth of ten major banks from 42.03% in July 2016 to 37.3% in August 2016 on year on year (yoy) basis.

As of August 2016, Bank Mandiri recorded an increase of impairment loss reserves by 36.49% to IDR26.02 trillion. However, President Director of Bank Mandiri Kartika Wirjoatmodjo predicts that NPL ratio of the bank will decline during the fourth quarter of 2016.

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According to Tiko, in general Bank Mandiri’s NPL ratio continued to grow during the first quarter to third quarter of 2016. As of 2016, Bank Mandiri’s NPL ratio stood at the level of 3.7% with the coverage ratio in the third quarter stood at the level of 135%.

Meanwhile, Bank Central Asia (BCA) also recorded an increase in impairment loss reserves by 44.74% to IDR10.4 trillion. President Director of BCA Jahja Setiaatmadja said that the bank may record an increase in NPL ratio in September 2016. According to Jahja, BCA will review the potential problems that may occur from some debtors.

Meanwhile, OCBC NISP recorded an increase in impairment loss reserves by 64.43% to IDR2.59 compared to the same period in the last year. President Director of OCBC NISP Parwati Surjaudaja said that the bank’s NPL was ranging at the level of 1.5%-2% as of September 2016.

“The number of impairment loss reserves was affected by credit growth and external conditions”, said Parwati. Parwati predicted that NPL reserved in the fourth quarter of 2016 will be lower compared to previous quarter.

Head of Economic Risk and Banking System Subdivision at Deposit Insurance Agency (LPS) Mochammad Doddy Arifianto is optimistic that banks’ NPL ratio will gradually decrease at the range of 2%-2.5% during the fourth quarter of 2016 to the first quarter of 2017.

Doddy said that the stable NPL will drive the decrease in impairment loss reserves, probably in the first quarter of 2017.

(Muhammad Farid/Translator)