JAKARTA. Chief Executive of Banking of Financial Services Authority (OJK), Dian Ediana Rae, believes that the current high non-performing loan (NPL) ratio is cyclical in nature, meaning that it may fluctuate according to changes in economic condition.

Said notion responds to the trend in which several banks reported high NPL rates, even close to the limit of 5% according to the regulators, until this first half (H1) of 2024.

“It’s possible that high NPL is detected due to the end of restructuring term,” Rae said, quoted Tuesday (20/8). He further mentioned that this condition has been controlled, and banks were not exposed to bigger risks.

According to OJK, at industry level, banking’s gross NPL was at 2.26% as of June 2024, down 18 basis points (bps) from 2.44% seen in June 2023. Meanwhile, net NPL slightly increased to 0.78% from 0.77%.

Prior to this, Rae mentioned that OJK supervisors continue to closely monitor the condition in order to ensure the banks are capable of mitigating risks well. (AM/ZH)