Indonesia Banking Survey 2017 - Weathering the rise in credit risk. What’s next for Banks in Indonesia?

This is the 7th PwC Indonesia Banking Survey. PwC surveyed 78 respondents from 58 different banks in Indonesia, together representing 87% of banking assets in Indonesia. The respondents were from upper management at the respective banks. It has been almost 2 years since our last survey and a lot has changed in that time period. We have seen rising volatility in financial markets, weak commodity prices and a sharp increase in NPLs. Brexitand a surprising US election result have added to global uncertainty. Although in our 2015 survey many bankers forecasted a rise in credit risk, the majority underestimated the extent of that risk.

In our 2017 survey, credit risk is clearly still a big concern but the sense is that stability has improved -most now see NPLs on the decrease. Loan growth is lower than in the past, but with more than half of respondents expecting growth of 10% or more in 2017, it should all be viewed in perspective. There are many markets around the world that would envy that sort of growth environment. Overwhelmingly, respondents felt Indonesia to be the most attractive banking market in Southeast Asia, and most feel the market conditions to be improving.