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Indonesia: Bank Central Asia and Bank Mandiri—Spurring retail loans and exploring digital lending

Formal financial institutions have connected only 22% of the Indonesian population. A huge potential for the financial sector still needs to be explored, and digitised lending, which combines retail banking with financial technology, should be a future solution.

January 06, 2016 | Shenming Wang

Macroeconomic situation in Indonesia

Indonesia encountered its weakest year in 2014 amid an unstable world economy. Compared with a 5.5% growth rate in 2013, Indonesia’s annual economic growth rate in 2014 was lower than expected and remained at 5.02%. Since the beginning of 2015, the Indonesian government has adjusted relevant policies and reforms, expecting the growth rate to remain unchanged in 2015 at 5.2% and to further accelerate to 5.5% in 2016. In February 2015, Bank Indonesia (BI), the country’s central bank, trimmed its benchmark interest rate for the first time in three years, from 7.75% to 7.5%. However, in the second quarter of 2015, the growth rate of GDP was 4.67% year-on-year (YoY), which was the slowest pace since 2009. This was somehow in tandem with what Bank Indonesia said about the Indonesia banking industry in 2015: its national banking industry will face a slower, but sustainable growth and the credit growth will still be expected to go down to 13%–15% in 2015.

Indonesian retail lending market

In 2014, loans across all the segments in the banking sector grew by 11.2% compared to 22.1% in 2013. This was a clear indication of the slowdown in the economy. Local, sharia, and state-owned banks expect to boost loans in 2015 by focusing on their retail consumers and increasingly on small and medium enterprises (SME). Alternatively, banks would develop fee-based income to compensate for decreasing loan growth. As retail loans are an integral part of the retail banking industry, mortgages and unsecured personal loans are considered key consumer products for bank revenue. TAB research shows that Indonesian total retail loans grew 11.6% YoY to Rp1,014 trillion, from Rp909 trillion since 2014. This growth was lower compared to that in 2013 when loans grew by 13.6% YoY (Figure 1). Although the Indonesian government has implemented some packages to boost the economy, demand for consumer l...

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Categories:

Payments, Retail Banking, Retail Payments

Keywords:Bank Mandiri, Bank Central Asia, Retail Loans, Digital Lending, Mortgage, Retail Banks, Auto Lending


Indonesia: Bank Central Asia and Bank Mandiri—Spurring retail loans and exploring digital lending

Formal financial institutions have connected only 22% of the Indonesian population. A huge potential for the financial sector still needs to be explored, and digitised lending, which combines retail banking with financial technology, should be a future solution.

January 06, 2016 | Shenming Wang

Macroeconomic situation in Indonesia

Indonesia encountered its weakest year in 2014 amid an unstable world economy. Compared with a 5.5% growth rate in 2013, Indonesia’s annual economic growth rate in 2014 was lower than expected and remained at 5.02%. Since the beginning of 2015, the Indonesian government has adjusted relevant policies and reforms, expecting the growth rate to remain unchanged in 2015 at 5.2% and to further accelerate to 5.5% in 2016. In February 2015, Bank Indonesia (BI), the country’s central bank, trimmed its benchmark interest rate for the first time in three years, from 7.75% to 7.5%. However, in the second quarter of 2015, the growth rate of GDP was 4.67% year-on-year (YoY), which was the slowest pace since 2009. This was somehow in tandem with what Bank Indonesia said about the Indonesia banking industry in 2015: its national banking industry will face a slower, but sustainable growth and the credit growth will still be expected to go down to 13%–15% in 2015.

Indonesian retail lending market

In 2014, loans across all the segments in the banking sector grew by 11.2% compared to 22.1% in 2013. This was a clear indication of the slowdown in the economy. Local, sharia, and state-owned banks expect to boost loans in 2015 by focusing on their retail consumers and increasingly on small and medium enterprises (SME). Alternatively, banks would develop fee-based income to compensate for decreasing loan growth. As retail loans are an integral part of the retail banking industry, mortgages and unsecured personal loans are considered key consumer products for bank revenue. TAB research shows that Indonesian total retail loans grew 11.6% YoY to Rp1,014 trillion, from Rp909 trillion since 2014. This growth was lower compared to that in 2013 when loans grew by 13.6% YoY (Figure 1). Although the Indonesian government has implemented some packages to boost the economy, demand for consumer l...

Please login to read the complete article. If you already have an account, you can login now or subscribe/register.

Categories:

Payments, Retail Banking, Retail Payments

Keywords:Bank Mandiri, Bank Central Asia, Retail Loans, Digital Lending, Mortgage, Retail Banks, Auto Lending


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