Corporate credit in 2025 is expected to be under pressure due to the risk of an economic slowdown that still haunts corporate businesses. This is a result of continuing global economic uncertainty.
Meanwhile, based on Bank Indonesia (BI) money circulation analysis reports, corporate banking credit in the country appears to be growing at a slower pace. As of November 2024, corporate credit only grew 15.4% on an annual basis or year on year (yoy) reaching IDR 4,106.1 trillion, from October 2024 which grew 15.6% to reach IDR 4,068.0 trillion.
Senior Vice President of the Indonesian Banking Development Institute (LPPI) Trioksa Siahaan assessed that with people’s purchasing power still under pressure and global geopolitical conditions still heating up, as well as the threat of inflation, the outlook for corporate credit will still be depressed.
“Future challenges revolve around people’s purchasing power which has not improved and inflation. Projected corporate credit growth also seems to be low around single digits and will be heavier than this year,” said Trioksa to kontan.co.id, Friday (27/12) .
Trioksa explained that the strategy that the government needs to implement is how to encourage the recovery of people’s purchasing power and stimulate the economy again.
According to him, in 2025 there will be many challenges in credit expansion, banks must be able to anticipate them and look for alternative potential income apart from interest income such as fee based income.
A number of banks also admit that the many challenges faced in distributing corporate credit in 2025 mean that distribution growth is likely to slow down.
The prospects are there but moderate
Director of OK Bank, Efdinal Alamsyah, said that the challenges that banks will face next year include weakening global demand. If this happens, Indonesia’s exports have the potential to decline. This can reduce the company’s ability to repay and hinder credit growth.
“The next challenge is the risk of bad credit, where if there is a weakening of the economy, the risk of default (NPL) could increase, especially for sectors such as property, manufacturing and transportation, and also if there is an increase in the benchmark interest rate, this will “causing corporate borrowing costs to increase,” he explained.
The final challenge is global uncertainty. External factors such as trade wars, geopolitical conflicts, or supply chain disruptions can influence business and investment sentiment, which ultimately impacts credit absorption.
Efdinal said that the prospects for corporate credit next year remain, but it is likely that the growth rate will be moderate. In 2025 OK Bank Indonesia targets corporate credit growth of 10% when compared to the projected realization of corporate credit at the end of 2024.
Meanwhile, until the end of this year, Bank Oke Indonesia’s corporate credit is projected to experience growth of 20% when compared to the end of 2023.
In distributing corporate credit, OK Bank said Efdinal will focus on sectors that have strong growth potential, are resilient to economic weakness, as well as sectors that support the government’s strategic agenda and global trends.
These sectors include infrastructure and construction, information and communication technology, manufacturing, health and pharmaceuticals, tourism and the creative economy, as well as the property and real estate sectors.
Efdinal said, maintaining corporate credit growth amidst economic uncertainty requires a balanced strategy between aggressive growth and risk mitigation, for example by diversifying the credit portfolio by reducing concentration risk in certain sectors that are vulnerable to economic downturn, and carrying out tighter risk management so that can reduce the ratio of non-performing loans (NPL).
In addition, ensuring credit quality is maintained, namely by tightening credit risk analysis, including stress tests for bad economic scenarios and monitoring vulnerable sectors more intensively, such as property or commodities.
“The bank also strengthens relationships with corporate customers, so that it can increase loyalty and expand business opportunities from existing clients,” he said.
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Meanwhile, President Director of PT CIMB Niaga, Lani Darmawan, said that next year it is estimated that the cost of funds will still be high due to various economic challenges. Therefore, the party will focus on growing MSME and retail credit
“We will focus on loan growth which will be consistent in SMEs & retail KKB KPM. Meanwhile, we estimate corporate credit will grow by around 5% -6%,” he said.
Ari Rizaldi, Director of Treasury & International Banking at PT Bank Syariah Indonesia Tbk (BRIS) or BSI also said that in the midst of global economic challenges, corporations will adapt in terms of credit demand in order to achieve market balance conditions.
However, he sees the opportunity for a reduction in the benchmark interest rate next year to be wide open, which will also be a positive sentiment for corporate credit distribution.
“Our commitment as a bank that carries out an intermediation function is to definitely increase its financing (for the corporate segment) in 2025,” he said.
