Indonesian banks' profit growth could suffer for up to two years

Blame it on low interest rates in the financial sector.

According to UOB KayHian, the Indonesian banking sector may need to accept the reality of lower ROEs and valuations. Low interest rates in the financial sector could affect profit growth for 1-2 years and potentially ROEs as well. Higher loan growth, better cost efficiency, and potentially lower NPL levels could come in as upsides following the adjustments.

"Despite the potentially lower ROEs, we view banks and investors will start to accept the fact that Indonesian banks’ ROEs and valuations should come down from the current high levels."

The analyst adds that investors are then likely to focus on loan growth, non-interest income, and operational efficiency which would drive profit growth. Overall, the lower lending rate environment could make the Indonesian banks more comparable to other Asean banks in the Phillipines, Thailand and Malaysia over the long term.

Also Read

Cambodia enables QR payments from foreign e-wallets through Alipay+

Hong Kong to rename ‘virtual banks’ to ‘digital banks’

Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!

I want to download the media kit