BCA Limits Foreign Currency Loans

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PT Bank Central Asia Tbk (BBCA) limits its foreign currency denominated loans to maintain its foreign exchange liquidity. Its forex fund currently is invested in short-term interbank loans and state debentures, said Jahja Setiaatmadja, Vice Presi­dent and Director of BCA.

Only US$ 1.7 billion of US$ 3.5 billion will be alloted for loans. “We deliberately controlled the risk by limiting the foreign currency loan portfolio,” said Jahja.

In comparison to total loan portfolio, the foreign currency loan portfolio is kept at a minimum. As of March 2011, the bank’s outstanding loan was Rp 150.33 trillion. 90.4 percent of which was in rupiah. The remaining 9.6 percent was in foreign currencies.

The bank chose to restrain the loans to avoid high risks in relation to the global economic condition. The bank’s analysis stated that the risk in foreign currency loans may increase non-performing loans. The bank expects sluggish demand on exported goods due to a rise in commodities including crude oil. The natural disaster in Japan can also slow down the demand. It was likely to reduce exporters’ production level and it may consequently lower the exporters’ capability to repay their loans.

In March 2011, its gross non-performing loans fell 10 basis points to 0.7 percent from 0.8 percent in March 2010. In comparison to December 2010, the gross non-performing loan increased 10 basis points from 0.6 percent.

Haryo Koconegoro, Assistant Vice President of ICRA Indonesia, previously said the foreign currency loans will decline because rupiah will strengthen against the US Dollar, and debtors would prefer to borrow in rupiah.