Indonesian Banks Resilient Amid Financial Crisis in the US: Bank Mandiri Economist

Jakarta –

The United States (US) is in the middle of a financial crisis, because a number of large banks there have gone bankrupt. So does it affect banking in Indonesia?

Chief Economist of Bank Mandiri Andry Asmoro explained that until now the condition of Indonesian banks was still relatively protected from the impact of the failure of US banks. Even though it is recognized that banking conditions in the US have had an impact on the world economy and caused global financial market turmoil.

“Judging from various indicators, Indonesian banking is still quite resilient in facing global turmoil. Asset quality is still maintained with the NPL ratio which tends to continue to decline. In addition, banking capital is still very strong with a capital adequacy ratio of 26%, far above the provisions,” he said in a Virtual Media Gathering & Macroeconomic Outlook Presentation from the Office Team of Chief Economist Bank Mandiri and Mandiri Sekuritas, Tuesday (9/5/2023).

Andry added, currently the negative impact of banking conditions in the US on global financial markets has decreased. This happened thanks to the rapid response from financial authorities in the US and Europe.

Bank credit growth in Indonesia is still healthy, where in March, credit growth reached 9.9% yoy. Although this figure is slightly slower compared to the position at the end of 2022 which reached 11% yoy.

“The growth of third party funds (DPK) tends to slow down to 7% yoy, although in general it is still adequate in terms of liquidity, reflected in the LDR (Loan to deposit ratio) ratio which is still at 80%.,” he explained.

Going forward, Indonesia’s economic growth is expected to grow stronger. For the second quarter of 2023, Bank Mandiri Head of Macroeconomic & Financial Market Research Dian Ayu Yustina predicts economic growth in the second quarter of 2023, ranging from 5.05%, 5.07% to 5.1%.

This prediction is higher than growth in the first quarter of 2023 which grew 5.03% yoy. This figure has been released by the Central Bureau of Statistics (BPS).

“The potential for Q2 growth opportunities is our figure, what we convey is a projection of 5.05% to 5.1%, a figure of 5.07%. Various indicators have continued to appear earlier, the data for April, the consumer confidence index is still increasing,” he said.

As is known, the banks in the US collapsed. After Silicon Valley Bank, most recently, First Republic Bank also experienced the same thing.

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(ada/zlf)