Déjà vu: Flashback to the Indian banks two years ago: Indonesianbanks' restructured loans have soared from 1.8% of total loans2013to 5.3% in 2Q17, amid the NPL cycle and Indonesian financialservices authority OJK's (Otoritas Jasa Keuangan) asset quality relaxation.This scenario reminds us of the Indian banks in 2Q15, whentheir restructured loans reached 4.5% of total loans (from 4.0%1Q13), and eventually transformed into NPLs and write-offs in subsequentyears, raising average credit costs by 2.5x.。    Negative catalyst from expiration of NPL relaxation: In August2015, OJK relaxed the loan quality requirements from three pillarsone for two years. With this relaxation, Indonesian banks appearedto prefer restructuring their problematic loans instead of recognizingthem as NPLs. As the relaxation has now expired, banks nowneed to catch up on NPL recognition.。    NIM would also fall: The lapse of Indian banks' restructured loansto NPLs also lowered their NIMs from 3.2% to 2.9% in 2013-16, andthe decline could continue. Indonesian banks' NIMs have alreadydeclined from 7.9% in 2016to 7.4% in 1H17– and we believe this is justthe beginning.。    Loan growth remains a drag: Indonesian banks' loan growth slowedfrom 7.9% YoY in 2016to 7.7% in June 2017, prompting Bank Indonesiato cut its 2017loan growth target from 10-12% to 8-10%despite the 25bp rate cut in August 2017. Indonesian GDP growth,which has moved from 6.0-6.5% before 2013to 5%, is unlikelyrevive loan growth back to 20-30%, the level required to compensatefor the provisioning downside.。

声明：如本站内容不慎侵犯了您的权益，请联系邮箱：wangshiyuan@epins.cn 我们将迅速删除。