Yokohama. Loan growth is likely to accelerate by as much as 11 percent in Indonesia this year as banks are expected to return to healthy performance, Finance Minister Sri Mulyani Indrawati said on the sidelines of the 50th annual meeting of the Asian Development Bank in Yokohama, Japan, on Saturday (06/05).

"Most of their nonperforming loans have been restructured. Banks' credit growth would be better than last year," the minister said.

Total outstanding loans at Indonesian commercial lenders expanded 7.9 percent last year to Rp 4,377 trillion ($328 billion). This represents a steep decline from double-digit growth posted in earlier years as lenders were forced to set aside capital for covering bad debts from the mining and commercial sectors.

Asean+3 Macroeconomic Research Office (AMRO), a regional surveillance unit that monitors and analyses the economies of Southeast Asian countries plus China, Japan and South Korea, said in a note last week that Indonesian banks' outstanding loans are expected to expand by between 9 percent and 12 percent in 2017.

"Meanwhile, the deterioration in banks' asset quality seems to have abated, and the banking sector remains well-capitalized to administer credit expansion," AMRO said in its inaugural economic outlook published last week.

"The rise in NPL [nonperforming loans] over the past few years has been well-mitigated, although it warrants monitoring going forward. The banking sector, particularly the four largest banks, has a relatively ample capital cushion and should be able to absorb losses on most banks' balance sheets," AMRO said.