Economist: Indonesia's banking liquidity conditions are relatively well maintained

The use of banking funds in Indonesia is relatively well diversified. In contrast to SVB, whose assets are concentrated in long-term portfolios, the majority of banks in Indonesia channel their funds in the form of loans, around 60 percent, in

Jakarta (Armfalcon.com) – Economist at LPEM FEB UI Teuku Riefky assessed that currently the condition and quality of Indonesian banking liquidity is still relatively well maintained amidst the turmoil of the global economic crisis.

He said the majority of banks in Indonesia channeled funds in the form of loans of around 60 percent, then government and corporate bonds amounted to 14 percent of the total portfolio.

“The use of banking funds in Indonesia is relatively well diversified. In contrast to SVB, whose assets are concentrated in long-term portfolios, the majority of banks in Indonesia channel their funds in the form of loans, around 60 percent, followed by corporate bonds And government bonds whose portion reaches 14 percent of his portfolio,” said Riefky in Jakarta, Thursday.

Economic liquidity is reflected in the narrow (M1) and broad (M2) money supply, which grew by 4.8 percent and 6.2 percent respectively in March 2023.

In addition, the capital adequacy ratio or Capital Adequacy Ratio (CAR) of Indonesian banking is recorded at 26 percent and still shows an increasing trend in the last few months.

Furthermore, Riefky explained the ratio of loans to deposits or Loan Deposit Ratio (LDR) Indonesia is also at around 80 percent.

“Then we see that our Loan Deposit Ratio is also approaching the pre-pandemic level of around 80 percent, so the several indicators we have seen so far show that the condition of liquidity and asset quality in Indonesian banking is relatively adequate. well maintained And manageable,” said Reifky.

The composition of long-term banking assets in Indonesia is currently also considered safe.

Reifky continued to explain, if banks invest too much in long-term assets, such as bonds, banks will potentially face liquidity problems if they have to sell these assets quickly to meet their short-term obligations.

Therefore, although such long-term assets can form an important part of a banking investment portfolio, banks in Indonesia need to balance their long-term investments with their short-term liquidity needs as well as regulatory requirements.

Also read: BRI CEO: Bank liquidity is still sufficient for business growth

Also read: BI: Bank credit remains high and grew 9.93 percent in March

Also read: BNI President Director reminds banks to maintain liquidity to avoid failure

source: www.antaranews.com

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