Economics
Indonesian Lending Drive May Spur Bad Loans, Erode Bank Income
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A plan by Indonesia’s central bank to spur bank lending and economic growth may cause an increase in bad loans and erode earnings, according to Credit Suisse Group AG and Business Monitor International Ltd.
Bank Indonesia will begin penalizing banks with loan-to-deposit ratios below 78 percent as of today. PT Bank Mandiri, the country’s largest lender by assets, boosted its ratio to 72 percent from 66 percent in June, according to a company spokesman. PT Bank Central Asia raised its ratio to 55 percent from 51 percent, Corporate Secretary Raymon Yonarto said, while PT Bank Negara Indonesia has a ratio of 68 percent, central bank figures show.