REPUBLIKA.CO.ID,JAKARTA - Indonesian central bank, Bank Indonesia, said non performing loan (NPL) ratio recorded by banks was still high in a number of sectors. Deputy governor of the central bank Halim Alamsyah said the NPL ratios in the construction, mining, trade and social services were relatively high.

Alamsyah said there were a number of factors causing the high NPL ratios in the four sectors -- global economic condition, domestic economic stability, and liquidity.The NPL ratios were 3.09 percent in the mining sector, up from 2.49 percent in June; 3.06 percent in the mining sector up from 2.92 percent; and 2.96 percent in the social service , up from 2.48 percent in June. If the liquidity of banks improved in the second half of 2014, the impact would be positive on NPL in the four sectors, Alamsyah said.

"We believe the condition of the four sectors would also improve if the liquidity improved," he said.

The resilience of the banking industry would remain strong with credit risk, liquidity and the market under control and capital support strong, he said. In July 2014, the capital adequacy ratio (CAR) was relatively high at 19.18 percent, well above the minimum ratio of 8 percent as set by the central bank and the NPL remained low and stable at around 2 percent.

Meanwhile growth of credits to the private sector slowed to 15 percent (yoy) compared to 16.6 percent (yoy) earlier to follow the process of economic adjustment.

The liquidity condition of economy as well as banking industry is well under control as reflected in the M2 growth and third party funds - respectively growing 11 percent and 10.4 percent (yoy) in July 2014 and the decline in the financial market interest rate as a result of the inflow of money to the banking system. Bank Indonesia predicted that banking liquidity would remain good in line with the financial expansion by the government in the second half of 2014.

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