Indonesian bank NPLs ease to 2.07% in September, while online lending's TWP90 rises to 5.36%

Implications for lenders

Lenders that fund or partner with online platforms may want to review portfolio-level arrears now that aggregate TWP90 is 5.36%, above OJK's 5% threshold. With bank Loan at Risk at 8.50%, underwriting and provisioning may need to look beyond the 2.07% NPL ratio to restructured and watch-list loans.

Implications

Facts

Indonesia's Financial System Stability Committee (KSSK) published its third-quarter assessment on 3 November. For banks, the release puts the gross NPL ratio at 2.07% in September, down from 2.11% in August, ¹ and the net ratio at 0.82%. ² Loan at Risk, which adds restructured and special-mention loans to non-performing ones, was 8.50%. ³ The capital adequacy ratio was 24.30%, up from 24.1% in August, ⁴ and the loan-to-deposit ratio 88.11%. ⁵ Bank credit grew 13.26% year on year, with consumer loans up 4.86%, while deposits grew 8.22%.

Finance companies' receivables rose 2.21% year on year to IDR 518.34 trn, up from 1.68% in August. ⁶ Their gross non-performing financing ratio was 2.98%, down from 3.04% in August, ⁷ and the net ratio 0.81%, down from 0.83% in August. ⁸

For licensed online lending (pindar), the release gives outstanding loans of IDR 106.48 trn, up 17.02% year on year, ⁹ and an aggregate TWP90 ratio of 5.36%. ¹⁰ The release does not name the month for these figures; OJK's chair presented them at the KSSK briefing alongside the September bank data. OJK had reported TWP90 of 4.73% and outstanding of IDR 106.94 trn for August.

Analysis

Time series: the banks' gross NPL ratio has stayed in a narrow band since March (chart), and September's 2.07% is the lowest of the seven months shown, below August's 2.11%. Loan growth of 13.26% is being driven by investment and corporate lending, not consumers, so the stable ratio says little about household credit quality on its own; Loan at Risk at 8.50%, well above the NPL ratio, shows how much of the book sits in restructured or watch-list loans.

The divergence is between segments. Finance companies' NPF eased while their receivables growth recovered to 2.21% from 1.68%. Online lending did the opposite: TWP90 moved from 4.73% to 5.36%, above the 5% level OJK uses to flag platforms, while annual growth slowed from 22.07% to 17.02% and the stock fell below August's. Slower new lending shrinks the denominator, so part of the jump in TWP90 may reflect the brake on disbursements rather than only new defaults.

Cross-country, with different definitions: Indonesia's bank NPL ratio of 2.07% sits between the Philippines' 3.27% gross NPL ratio and Malaysia's 1.4% gross impaired-loans ratio for September. In all three, bank-level ratios are stable; in Indonesia, the stress shows up instead in the smaller, higher-yield online-lending segment.

Counterpoints and uncertainties

The online-lending figures are not tied to a named month in the KSSK release, and OJK's own monthly data may show a different reading. A single month's jump in TWP90 can partly reverse as platforms write off or restructure loans. Bank NPL ratios are flattered by strong corporate loan growth and do not show consumer-segment stress, which OJK reports separately.