Bank Negara Indonesia loan growth to slow to 13% in 2019

A moderation in private corporate and SOE loans will hit lending.

Bank Negara Indonesia (BBNI) should brace for slower loan growth of 13% in 2019 from 16% in the previous year, according to a report from UOB Kay Hian.

SOE lending should normalise to around 15% amidst the absence of a one-off 32% increase in SOE loans which boosted last year's lending levels.

The state-owned Indonesian bank should also witness a deceleration in private corporate loans which has been on a consistent downtrend after growing 13% in 2018 from 15% in 2017. "In 2019, we estimate a 13% yoy rise in corporate loans," analyst Raphon Prima said in a report.

The bank's bad loan ratio is also set to decrease following a decline to 1.96% from 2.96% in 2016-18 and provisions held stable at $503.76m-$553.43m (RP7.1-7.8t).

"Going forward, room for NPL ratio decrease is small. We expect NPL ratio to stabilise at 1.9%. Stable NPL ratio amid double-digit loan growth means NPL will increase, resulting in higher provisions. We expect provisions to grow 14% yoy in 2019 (2018: 4% yoy)," said Prima.