Indonesia's bank rakyat to boost 2016 loans

[JAKARTA] State-owned PT Bank Rakyat Indonesia said it will boost its lending by as much as 15 per cent next year, more than the banking sector average forecast by the country's regulator, as it pushes loans to small and medium-sized companies.

Increased government spending and greater foreign investment in Indonesia will make 2016 a "much better" year for Bank Rakyat than this year, the lender's President Director Asmawi Syam said.

The loan target for next year compares with a 12 per cent to 13 per cent forecast for the industry by the Financial Services Authority, the banking regulator.

"The difference is in our focus on lending to small to medium-sized businesses, which takes more presence on the ground and more hard work," Mr Asmawi said in an interview on Monday at the company's headquarters in Jakarta. "But it also means faster growth."

The optimism contrasts with plans by privately owned PT Bank Central Asia, Indonesia's largest bank by market value, to rein in its lending plans for next year amid concerns that bad loans will rise as the economy slows on weak commodity prices.

Indonesia's banks need to raise their provisioning against non- performing loans, which may hurt profits, the regulator warned this month.

Bank Rakyat's return on equity was 24.7 per cent, the highest among 53 Asia-Pacific banks with a market value of more than US$5 billion, according to data compiled by Bloomberg. The average for Chinese banks of a similar size was 17.3 per cent, while Bank Central Asia's was at 22 per cent.

BLOOMBERG