The Lingering Issue: Non-Performing Loans Plague Several Banks

Several banks are facing high non-performing loan (NPL) ratios amid unending economic challenges. The Financial Services Authority (OJK) reported that as of July 2023, the gross NPL ratio of the banking industry was 2.51 percent. However, some banks have a much higher gross NPL ratio, doubled or even tripled the industry. Some also have a net NPL ratio close to the safe threshold set by the authority, which is five percent.

Data as of June 2023 shows that PT Bank Sinarmas Tbk had a gross NPL ratio of 5.96 percent and a net NPL ratio of 2.19 percent. PT Bank Amar Indonesia Tbk had a gross NPL ratio of 7.33 percent and a net NPL ratio of 1.84 percent. PT Bank Pembangunan Daerah Banten Tbk (Bank Banten) had a gross NPL ratio of 9.59 percent and a net NPL ratio of 1.42 percent. PT Bank KB Bukopin Tbk had a gross NPL ratio of 10.53 percent and a net NPL ratio of 4.95 percent.

Trioksa Siahaan, Senior Vice President of the Indonesian Banking Development Institute (LPPI), said that banks with high NPL ratios suffered from deteriorating credit portfolio quality because some business sectors had not fully recovered. “Tightening bank liquidity also affects the increase in interest rates,” he said, as quoted by Kontan on Sept 25.