JAKARTA. Credit and Net Interest Margin (NIM) growth of the four largest banks in Indonesia slowed, although their net profit grew by about 3.1% on a year-to-year basis in October 2019.
Lee Young Jun, an analyst for Mirae Asset Sekuritas, said that the four banks are PT Bank Central Asia Tbk (BBCA), PT Bank Mandiri (Persero) Tbk (BMRI), PT Bank Rakyat Indonesia (Persero) Tbk (BBRI), and PT Bank Negara Indonesia (Persero) Tbk (BBNI). He said the cumulative profit growth of the four banks in the period of January-October 2019 was slightly dragged to 8.1%.
Young Jun explained the slow growth of the 4 banks' credit was caused by a number of factors. Starting from the economic slowdown, the interbank competition, and tight liquidity.
Those banks are also considered to be able to reduce their credit costs by 6 bps in October 2019. However, the achievement, said Young Jun, was caused by credit normalization and not driven by asset quality.
"We estimate that the normalization of credit costs will continue until the end of 2019," Young Jun said. (KR/AR)