Indonesia cbank says loan growth has rebounded

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KUTA, Indonesia Dec 3 Indonesia's central bank said there were signs that banks have started to lend more to clients and that loan growth may have rebounded in October from its lowest level since 2009, a senior official said on Saturday. Juda Agung, Bank Indonesia's (BI) executive director of economic and monetary policy, said based on commercial banks' daily reports to regulators, loan growth may have rebounded to 7.5 percent in October and could accelerate to 8.3 percent in November. The latest banking data showed that loans by commercial banks grew 6.47 percent in September on a yearly basis, its weakest in nearly seven years. Official data for October is due later this month. This year BI has cut its benchmark interest rate six times, eased lending rules and trimmed banks' statutory reserve requirement ratio, all in a bid to get banks to lend more and lift economic growth.

But bankers have said rising bad loans have made them more careful in giving money to borrowers. Agung said the trend of rising non performing loans had reached its peak and started to come down.

"This year, many companies were consolidating, banks too. But the NPL ratio has improved now and companies have finished their deleveraging process. They are now ready to take on more leverage," Agung told a media gathering in the resort island of Bali."The banking credit cycle is now in a recovery stage," he added.

Banks would probably lend more to property and commodity-related sectors, Agung said, noting an improvement in the prices of Indonesia's main commodities. BI's outlook for loan expansion during 2016 is 7 percent to 9 percent, while GDP growth is seen at 5 percent. It expects loan growth to pick up to 10 percent to 12 percent in 2017 and economic growth to reach 5.0 percent to 5.4 percent. Last year's GDP growth of 4.8 percent was the slowest since 2009.