The Indonesian banking sector continues to exhibit positive intermediate performance with a maintained risk profile. As of September 2024, credit growth remained strong, achieving a year-over-year increase of 10.85%, down slightly from 11.40% in August, amounting to IDR 7,579.25 trillion.

Among various credit types, investment credit experienced the highest growth at 12.26%, followed closely by consumer credit at 10.88%, and working capital credit at 10.01%. State-owned banks emerged as the primary drivers of this growth, reporting a 12.80% increase year-over-year. Furthermore, corporate credit surged by 15.43%, while credit to Micro, Small, and Medium Enterprises (MSMEs) also grew, albeit at a modest rate of 5.04%.

On the funding side, Third Party Funds (DPK) recorded a 7.04% year-over-year increase (up from 7.01% in August), reaching IDR 8,720.78 trillion. This growth was fueled by an increase in demand deposits, savings accounts, and time deposits, which grew by 9.38%, 7.30%, and 4.95%, respectively.

Liquidity within the banking industry remains adequate as of September 2024, with the Liquid Asset/Non-Core Deposit (AL/NCD) ratio at 112.66% and the Liquid Asset/Third Party Funds (AL/DPK) ratio at 25.40%. Both figures exceed their respective regulatory thresholds of 50% and 10%. The Liquidity Coverage Ratio (LCR) stands at 222.64%, while the Net Stable Funding Ratio (NSFR) is reported at 129.50%, indicating solid short-term liquidity and long-term funding resilience in the banking sector.

The quality of credit also appears stable, with a gross Non-Performing Loan (NPL) ratio of 2.21% (down from 2.26% in August) and a net NPL ratio remaining steady at 0.78%. The Loan at Risk (LaR) ratio has also decreased to 10.11%, nearing pre-pandemic levels recorded at 9.93% in December 2019. Overall, the banking sector's profitability is on the rise, with the Return on Assets (ROA) improving to 2.73%, up from 2.69% in August.

Moreover, the banking sector has seen significant growth in Buy Now Pay Later (BNPL) products, which constitute 0.26% of total credit. As of September 2024, outstanding BNPL credit rose dramatically by 46.42% year-over-year to IDR 19.81 trillion, with the number of accounts increasing to 19.82 million from 18.95 million in August.

In light of ongoing efforts to combat online gambling, the Financial Services Authority (OJK) has mandated banks to block over 8,000 accounts linked to this activity, as identified by the Ministry of Communication and Digital Affairs. Additionally, the Financing Receivables of Financing Companies (PP) showed a year-over-year growth of 9.39% as of September 2024, totaling IDR 501.78 trillion, supported by a 9.76% rise in investment financing.

The risk profile of financing companies remains stable, with a gross Non-Performing Financing (NPF) ratio of 2.62% and a net NPF of 0.81%. The gearing ratio for these companies has slightly declined to 2.33, well below the maximum threshold of 10.

In the fintech sector, outstanding peer-to-peer (P2P) lending financing grew by 33.73% year-over-year, amounting to IDR 74.48 trillion. The aggregate risk of credit defaults remains stable, with the TWP90 ratio at 2.38%.

Meanwhile, OJK has taken significant steps to enforce compliance within the financing sector, revoking the licenses of PT Investree Radika Jaya and PT Rindang Sejahtera Finance due to failure to meet minimum equity requirements and other violations. As of September 2024, six out of 147 financing companies have yet to meet the minimum equity obligation of IDR 100 billion.

To bolster financial literacy and promote digital financial services, OJK has implemented various educational initiatives throughout October 2024, targeting universities and urban centers to raise awareness of innovative financial technologies.

These developments signal a resilient banking landscape capable of navigating uncertainties while continuing to foster growth in various sectors of the economy.