IslamicFinance.de

The spread of COVID-19 is expected to hit Indonesian banks’ performance this year, but analysts remain hopeful that the industry will still be resilient. The Financial Services Authority (OJK) recorded gross non-performing loan (NPL) ratio at 2.79% in February, the highest level since May last year. Loan growth, meanwhile, stood at 5.93% in the month, reflecting the lowest expansion since November 2009, as demand plunged. The rise in bad loan ratio is also expected to increase pressure on banks’ profitability, even on Indonesian banks, which are considered to be some of the most profitable in the world. Although Moody’s expects bank profitability to decrease, vice president Alka Anbarasu also said Indonesian banks could still survive during the challenging climate as they could absorb the increase in credit costs.