Indonesia’s Banking Industry Most Profitable in Southeast Asia
Jimmy Hitipeuw | Kamis, 1 Desember 2011 | 07:04 WIB
JAKARTA, KOMPAS.com – Indonesia’s banking industry is the most profitable in Southeast Asia, according to Bank Indonesia (BI or central bank) Governor Darmin Nasution.
“Indonesian banking industry is the most profitable as seen in its return on assets (ROA),” he said in a seminar of Indonesia’s economic projection for 2012 here on Wednesday.
He said in September 2011, the ROA of the country’s banking industry reached 3.11 percent while the average ROA in Southeast Asia was only 1.14 percent. Darmin said the Indonesian banking industry is also very prudent reflected by its capital adequacy ratio (CAR) that reached 6.7 percent and its non-performing loan ratio (NPL) which was recorded at only 2.7 percent in September this year.
He stated however efficiency in the country’s banking industry is still low as seen in its ratio of operating expenses to operating income (BOPO) that reached 87.22 percent. By comparison the BOPO ratio in the ASEAN region reaches only 40 to 60 percent.
This inefficiency has contributed to making the lending rate to be high. Credit expansion in 2011 meanwhile reaches 25.3 percent (year-on-year) while the loan-to-deposit ratio (LDR) reaches 81.7 percent compared to 75.5 percent at the end of 2020.
Darmin however said that process of banking intermediary had cost a lot on the economy while debtors did not have other funding sources to choose from. He said the variety of fundamental problems had caused pseudo-equilibrium in the banking industry unable to be settled through market mechanism.
“A policy from the authorities is needed to bring the pseudo-equilibrium into a real equilibrium that could make contribution from the banking industry optimal to the country’s economy.”