JAKARTA. The high non-performing loan (NPL) rate was overshadowing the performance of domestic banking sector. As of October 2016, ten major banks still continued to increase the portion of loan loss provision (CKPN).

Citing the financial report, as of October 2016 the loan loss provision of the ten major banks was skyrocketing by 36.92% to Rp 103.17 trillion compared with the last year (year on year/YoY). Bank Permata recorded the highest increase in loan loss provisions among the ten banks. The loan loss provision of Bank Permata has hiked by 96.13% to Rp 5.63 trillion.

Meanwhile, Bank Permata allocated as much as Rp 29.42 trillion of loan loss provision, or the largest among the ten banks, followed by Bank Rakyat Indonesia (BRI) with Rp 22.12 trillion.

However, the bankers are optimistic that the NPL rate will decrease in the next year. “The decrease in NPL rate will reduce the allocation of loan loss provision in the next year,” said Director of Bank Tabungan Negara Sulis Usdoko, Wednesday (14/12).

Corporate Secretary of Bank Negara Indonesia (BNI) Kiryanto said that the improvement of credit quality in 2017 will be supported by the improvement of economic growth and various incentives. The increases in the commodities and coal prices will also help the banks to reduce the NPL rate.

Likewise, President Director of Bank Bukopin Glen Glenardi said that the loan loss provision will decline in the next year. The bank is planning to reduce the coverage ratio by 6%-8% from the current position of 48%-49%. Glen added, most of the loan loss provisions were allocated to mining and trading credits.

Financial Service Authority (FSA) estimates that the NPL rate has been culminated. FSA predicts that the NPL rate of banking industry is potentially to move down to the level of below 3% by the end of 2016.

The NPL rate of banking industry has slightly declined from 3.22% in August 2016 to 3.1% as of September 2016.

As of the last month, the NPL rate of mining sector has shown improvement after hit the level of 7.22% in August 2016. As of September 2016, Bank Permata is the bank with the highest NPL rate. The bank itself has recorded the gross NPL rate at the level of 4.86%. This has increased by 2.36% from the level of 2.50% as of September 2015. (Muhammad Farid/Translator)

Editor: Sanny Cicilia