ASEAN KEY DESTINATIONS
Banks set moderate growth target for corporate loans
Major lenders have set what they call a moderate growth target in terms of the corporate lending segment this year, citing the wait-and-see mode that their clients are currently taking.
Bank Mandiri corporate banking director Royke Tumilaar said on Monday that the state lender had estimated corporate lending growth of 8 to 10 percent this year.
“It will pretty much depend on the economy, but right now the economy is lagging, so we don’t expect our corporate banking business to flourish that much,” he said.
With a growth target of 8 to 10 percent, Mandiri’s outstanding loans in the corporate segment are estimated to reach at least Rp 192.46 trillion (US$14.85 billion) by year-end. Its latest financial report shows that last year, it had Rp 178.2 trillion worth of corporate loans, Rp 97.02 trillion of which was recorded as new loan disbursements.
Corporate business remained the biggest segment for Mandiri, contributing 37.5 percent to the total lending portfolio.
However, Royke said that it had started to feel the pinch of the sluggish economy this year as demands slowly decelerated in the first quarter.
“Some clients are still taking the wait-and-see approach when it comes to their businesses. Our first quarter growth does not seem to be as bright as last year,” he added, without providing details.
According to Royke, it hopes that its upcoming syndicated loan facilities, which involve toll road and seaport projects, will help the lender achieve its full-year target.
Mandiri has not officially published its first quarter results and is slated to do so next week.
Meanwhile, Bank Central Asia (BCA) corporate banking group head Wira Chandra said that the private lender was eyeing between 10 and 12 percent annual corporate banking growth in 2015, a decline from the 16.9 percent it booked just a year ago.
Such growth will bring its outstanding corporate loans to around Rp 132.53 trillion and Rp 134.94 trillion by year-end.
Similar to Mandiri, BCA posted slower pace in the first quarter compared to the same period in 2014, with slow growth across the board, Wira said.
“We disburse corporate loans to various sectors actually, but we are becoming more selective in the property sector and we haven’t ventured into mining,” he added.
Its major corporate segments will remain trading, plantation, agriculture and construction.
BCA, according to Wira, still has several more syndicated loan projects with Mandiri and state lender Bank Negara Indonesia (BNI), including in the property and fertilizer sectors.
“We hope to sign the deals this year, but there may be some that we have to postpone due to current economic conditions,” Wira said.
Separately, BNI business banking director Herry Sidharta said that it would temporarily reduce its exposure to commodity related loans, citing current volatility in the commodity sector.
“We may still disburse loans to commodity firms, but will be more thorough in the selection process,” he said.
It is currently reviewing its business plan for 2015, but plans to maintain a conservative target in its corporate banking segment.
BNI’s financial statement said that the lender had Rp 119.71 trillion in its corporate loan portfolio in 2014, with a large chunk channeled to the trading sector.
According to a first quarter survey of the banking industry that was published by Bank Indonesia (BI) recently, local banks believe full-year lending growth will amount to 17.1 percent year-on-year, despite the expected slowdown in the country’s economy this year.
The projected growth rate is significantly higher than the 11.6 per cent that the banking industry posted in overall loans in 2014 and higher than the 15 to 17 percent target guideline that has been set by the central bank itself.
The new report, the results of which were collected from 42 commercial banks that BI claims controls 80 percent of the nationwide lending market, attributes the optimism to expected improvement in the economy.
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