CIMB Niaga sees bad debt provisioning falling
Indonesia's second-largest private sector bank, Bank CIMB Niaga, has said that bad loans may have peaked due to a rebound in commodities. The recovery means that troubled resources companies are more able to pay their debts and will allow the bank to focus on more credit-worthy customers. Malaysia's CIMB set an above-average size of funds to cover bad loans emanating from its subsidiary, but sees these provisions trending downwards. The lender's non-performing loans jumped to 3.9% in 2016, the highest level since 2014.

The bank has moved away from commodities lending to focus more on clients and markets with “more robust credit-worthiness,” he said. “It is going to be a much robust portfolio in the future.”



The lender is seeking to provide financing to more infrastructure companies and their suppliers, and small-to-medium enterprises, Siahaan said.



CIMB Niaga shares gained 0.5 percent as of 9:25 a.m. In Jakarta, more than a gauge of financial stocks. The shares have rallied 17 percent this year, extending a 42 percent advance in

2016, as some analysts start to build in a bad-loan recovery into their forecasts.



Gross NPLs may decline to 3.5 percent this year and fall further to 3.1 percent in 2018, Igor Nyoman Putra, an analyst at PT BCA Sekuritas, said in a report on Feb. 21.



Weak credit demand in Indonesia will likely last a few more quarters before improving with the economy, and the largest lenders are likely to endure an increase in NPLs in the near term before loan growth and asset quality recover, according to Bloomberg Intelligence. - Bloomberg







