Indonesian banks will see “more than 12 per cent” loan growth in 2018 thanks to a recovering global economy and a pick-up in commodity prices, says its Financial Services Authority (OJK).

Its head Wimboh Santoso expressed confidence that the sluggish bank lending that has hobbled Indonesia was coming to an end.

Loan growth in Indonesia has fallen below 10 per cent since the start of 2016, compared with more than 20 per cent during the commodity boom years before that.

According to the IMF, bank loan penetration in Indonesia was around 34 per cent of gross domestic product in 2015, which was among the lowest of Asia-Pacific countries.

As a result, fintech firms, which offer loans of as little as a few hundred dollars, have seen a spike in lending, leading to the emergence of peer-to-peer lending platforms.

The country recently announced it is planning on setting a cap on interest rates and the size of loans offered by fintech firms.

Santoso also said that there were many foreign banks interested in coming to Indonesia.

“With more investors interested to come, the more opportunities they will bring. We will let them come, but only if they stay permanently in Indonesia.”

He announced that a deal with Japan’s Mitsubishi UFJ Financial Group to take control of PT Bank Danamon, Indonesia’s fifth-largest bank, was also being considered.

“We’ve asked them to submit a more detailed medium to long-term business plan.”

The transaction, if successful, would mark the biggest acquisition of an Indonesian firm on record.


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