JAKARTA: The banking industry saw loan growth approaching double digits in April, even as growth remained sluggish in the micro, small and medium enterprise (MSME) segment, according to the Financial Services Authority (OJK).
The authority reported that overall bank credit grew 9.98% year-on-year (y-o-y) to 8.7 quadrillion rupiah in April, slightly higher than the 9.49% increase recorded in March.
Investment credit registered the strongest growth among all categories at 19.48%, while working capital and consumer loans posted significantly lower growth at 6.04% and 6.13%, respectively.
In the debtor categories, the corporate segment posted the highest growth at 15.51% y-o-y in April. On the other hand, MSME debtors saw a modest uptick from 0.12% in March to 0.16% in April.
The MSME segment had been in contraction territory since October 2025 before it returned to expansion in March.
Despite the improvement, the latest figure is still a far cry from the OJK’s loan growth projection for the segment this year, ranging between 7% and 9%.
The agency previously attributed the sluggish growth in MSME lending to banks’ efforts to clean up their balance sheets and reduce bad loans, and the segment’s performance expected to rebound and banks achieve the target range later this year.
In a virtual press conference last Friday, Dian Ediana Rae, the OJK’s chief executive for banking supervision, said banking intermediation showed positive performance with a “maintained risk profile”.
Dian highlighted state-owned banks recording the highest loan growth in April at 14.35% and that the banking industry maintained solid performance, with liquidity above the safe threshold. He noted, however, that the growth of third party funds slowed in the same period from 13.55% y-o-y in March to 11.39% in April.
Meanwhile, non-performing loans at local banks edged up from 2.14% to 2.17% y-o-y in March-April, while return on assets dipped from 2.47% to 2.46% over the same period.
Dian said the figure still “reflected strong banking capital resilience as a buffer to “, and expressed optimism that the current levels of bank capital would help cushion the sector from the immediate impacts of a weakening rupiah.
But he acknowledged that mounting pressures from the rupiah’s depreciation could pose risks, particularly for borrowers with high foreign exchange exposure, adding that the OJK would ensure adequate impairment loss allowance and maintain capital resilience.
The authority has also ordered banks to implement comprehensive risk management across all business operations while monitoring recent developments.
The rupiah hit its lowest level of 18,000 per United States dollar for the first time last Thursday, extending its losses this year to more than 7% and making it Asia’s worst-performing currency as rising oil prices and deteriorating trade dynamics rattle investors.
Bank Indonesia has said it will continue to monitor developments in global and domestic financial markets and take the necessary measures to stabilise the rupiah and strengthen external resilience. — The Jakarta Post/ANN
