The mortgage sector in Indonesia is witnessing a concerning trend with the escalating ratio of non-performing loans (NPLs), posing challenges amidst economic uncertainties. Data from both the Financial Services Authority (OJK) and Bank Indonesia (BI) reveal a worrisome trajectory in property NPL ratios, raising alarms within the financial industry.
According to OJK data, the property NPL ratio stood at 2.4% in December 2023, marking an increase from previous years and exceeding levels observed during the COVID-19 pandemic in 2020. Similarly, BI reported a rise in the property NPL ratio to 2.63% in January 2024, surpassing the previous month's figure and indicating a persistent upward trend.
Lani Darmawan, President Director of PT Bank CIMB Niaga Tbk. (BNGA), attributes this trend to the era of high-interest rates following the COVID-19 pandemic, coupled with robust credit growth. While acknowledging the challenges, Lani emphasizes CIMB Niaga's commitment to prudent credit processes and portfolio management, resulting in an improvement in mortgage quality.
Setiyo Wibowo, Risk Management Director of PT Bank Tabungan Negara Tbk. (BBTN), explains that the typical increase in NPLs at the beginning of the year is part of an annual cycle, with banks intensifying collections to enhance performance. Despite this, BBTN has maintained mortgage asset quality, boasting an NPL ratio of 1.9% in January 2024, better than the industry average.
PT Bank Central Asia Tbk. (BCA), Indonesia's largest private bank, has successfully kept its mortgage NPL ratio low, standing at 1.1% as of December 2023. Jahja Setiaatmadja, BCA's President Director, attributes this achievement to a prudent loan disbursement policy, expressing confidence in maintaining stable asset quality in the future.
PT Bank Mandiri (Persero) Tbk. (BMRI) has managed to avoid the negative property NPL trend, with continuous improvement in NPL trends. Darmawan Junaidi, BMRI's President Director, credits the implementation of best practices in risk management for this positive trajectory.
However, PT Bank Negara Indonesia (Persero) Tbk. (BBNI) acknowledges potential impacts from the industry trend, with a relatively stable NPL ratio. Royke Tumilaar, BBNI's President Director, highlights gross NPL figures of 2.14% in 2023, down from the previous year, while net NPL was at 0.61% throughout 2023, indicating a slight increase from 2022.
Trioksa Siahaan, Head of Research at the Indonesian Banking Development Institute (LPPI), attributes the worsening property NPL trend to economic challenges faced by the lower-middle-class population. Despite overall economic growth, disparities have led to uneven impacts, particularly affecting the lower-middle class.
In conclusion, proactive measures in risk management and targeted interventions are crucial to address the challenges posed by the rising mortgage NPL ratios in Indonesia, ensuring the stability of the financial sector amidst economic uncertainties.