Financial System Stability Maintained

Jakarta, InfoPublik—Bank Indonesia’s (BI) Communication Department Executive  Director Onny Widjanarko said that despite the risk of the impact of Covid-19 widespread outbreak on financial system stability continues to be observed, the May 2020 Capital Adequacy Ratio (CAR) of banks remains high at 22.14 percent, and the ratio of non-performing loans (NPLs) remains low at 3.00 percent (gross) and 1.17 percent (net).

"However, disbursement of lending/financing from the financial sector remains limited because of weak domestic demand and banking prudence due to the continuing Covid-19 pandemic," Onny said in a press release received Wednesday (7/22/2020).

He explained, credit growth in May 2020 was recorded at 3.09 percent (yoy), slowing compared to that of April 2020's growth of 5.73 percent.

Onny said that the development of credit restructuring during the Covod-19 pandemic, which is predicted to have peaked in April 2020 and the implementation of government guarantee program for MSME credit in the context of national economic recovery is expected to encourage the recovery of intermediation performance.

Meanwhile, the growth of Third Party Funds (DPK) was higher than credit growth which was 8.89 percent (yoy).

"In the near future, Bank Indonesia will continue to adopt accommodative macroprudential policies in line with the policy mix implemented previously and the national policy mix, including various efforts to mitigate risks in the financial sector due to the spread of Covid-19," he concluded. (Photo: Isma/InfoPublik, reporter: Isma, translator: Penni P. Rusman)