BRI Targets 14% Growth in Loans This Year
Jakarta. Bank Rakyat Indonesia, the country's second-biggest lender by assets, expects to maintain its double-digit loan growth this year, amid uncertainty in the global economy that may permeate through the domestic economy and undermine purchasing power, a BRI executive said on Tuesday (31/01).
The state-controlled lender targets a loan growth of 12-14 percent this year, at par with last year when the lender's loan growth expanded 13.8 percent to Rp 635 trillion ($47.5 billion). The target is higher compared to the Financial Services Authority's (OJK) target of 10 percent to 12 percent but matches President Joko "Jokowi" Widodo's goals.
"We hope the economy will be better this year but we can't hope for too much," Sunarso, BRI vice president director, said in a press conference.
The Indonesian government targets the economy to grow by 5.1 percent this year, up from last year's estimate of 5 percent.
The World Bank and Bank Indonesia – the country's central bank – share the government's sentiments on growth, while some economists disagree.
Edward Teather and Alice Fulwood, economists at UBS cited in their recent report, that Indonesia's real gross domestic product growth would be at 4.8 percent next year, recognizing that the country still needs to overcome its troubles with nonperforming loans from the past few years before economic growth can pick up.
The economists said that the recent rally in global coal price may not necessarily lead to local miners increasing their investment because the companies need to unwind their debt first.
"Our non-consensus view of the depressed growth in 2017 is heavily based on the notion that the post credit/commodity balance sheet clean-up is at an early stage. As the repair and adjustment process continues cyclical growth prospects should improve – which is why we expect an improvement in real GDP growth in 2018," they wrote, adding that they predict that the country's GDP would reach 5.2 percent in 2018.
"Fiscal policy promises to be of less help in 2017 than early 2016, but easy monetary policy settings and state control of a large part of the banking system could help the expansion of credit," Teather and Fulwood wrote.
Minister of Finance Sri Mulyani Indrawati warned earlier that there will be headwinds in the near future for Indonesia due to weakened global demand, low commodity prices, China's economic rebalancing, effects from Brexit and the United States' new economic policy under its new administration.
She said the government will strengthen domestic economy by keeping purchasing power in check, increasing investment and expanding government spending.
The government will also sanction new regulations and encourage the export of local products by improving its quality standards to stay competitive in the international market.
"I think the global condition has yet to change but our country will be able to face the global challenge," Sunarso said.
BRI also targets its profits, excluding that of its subsidiaries, to grow 3 percent to 5 percent this year, higher than last year's growth of 2.2 percent. The lender booked Rp 25.8 trillion in net income last year.
BRI, the world's biggest microlender, will increase its profits by reaching more customers. The bank will tailor its strategy to each region's needs and preferences, Sunarso said. With the help of its new satellite, the lender will also be able to reduce its operational costs, expand accessibility while increasing its fee-based income.
The state-controlled lender reported a 16 percent growth in its net interest income to Rp 65.7 trillion last year. The lender's fee-based income increased 25 percent to Rp 9.2 trillion.
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