The Financial Services Authority (OJK) stated that the domestic banking industry in Indonesia remains strong and stable amidst the turbulence in the banking system in the United States (US) and Europe following the bankruptcy of several large banks. Chairman of the OJK Commissioner Council, Mahendra Siregar, assessed that the stability of the financial sector remains maintained with the performance of financial institution intermediation improving and capital and liquidity at adequate levels. "Such conditions are an important modality in facing global dynamics," he said at the Monthly Commissioner Council Meeting (RDKB) on Monday (3/4).
As of February 2023, the distribution of banking industry loans had reached IDR 6,375.3 trillion. The value grew by 10.64% compared to the previous year. Meanwhile, third-party funds (DPK) of the banking industry amounted to IDR 7,989 trillion in February 2023, an 8.18% YoY growth. As for capital, the banking industry's Capital Adequacy Ratio (CAR) was at a sufficiently high level of 26.1%, compared to 25.88% in January 2023. The Liquid/Non-Core Deposit Ratio (AL/NCD) and Liquid/DPK Ratio (AL/DPK) were 129.58% and 29.09%, respectively, in February 2023. These values are well above the respective threshold limits of 50% and 10%. At the same occasion, OJK Banking Supervision Executive Director Dian Ediana Rae stated that the impact of banking problems in the US and Europe was relatively limited to Indonesia's banking industry, given that there was no direct exposure to banks that were closed in those countries, and the domestic financial stability remained intact.
"This is due to the quick response from authorities in various countries that were able to contain the contagion risk," she said. Dian added that in order for banks to remain resilient and able to anticipate risks from global dynamics, OJK requested banks to do three things. First, strengthen the implementation of governance, risk management, and prudence principles. Second, conduct stress testing regularly with various scenarios. Third, monitor the bank's asset and liability portfolios, including concentration risks in lending and funding. In this regard, OJK also closely monitors the composition of DPK and bank loans to ensure good diversification.
Fourth, maintain adequate capital adequacy ratios and liquidity availability on high-quality assets. Fifth, avoid speculative excessive risk-taking behaviors. In addition, OJK always takes anticipatory steps against various dynamics that could affect Indonesia's banks and strengthens coordination among authorities in the Financial System Stability Committee (KSSK). Dian emphasized that these things are OJK's strategy in maintaining the stability of the financial sector and facing future challenges while still being able to maintain national economic growth.
