What is the outlook for Indonesia banking industry in 2023?
We anticipate that global growth downturn will have a moderate effect on Indonesia, leading to a slower nominal GDP growth, which is projected to be between 8 - 10% YoY in 2023, compared to the 17.7% YoY growth recorded in Q3-2020. potential negative impact.
Looking ahead, Indonesia's banking industry is poised to expand at a CAGR of 7.8%, reaching an impressive $1009.3 bn by 2027. “We expect sustained profitability at Indonesia's major banks in 2024 and 2025, driven by lower credit costs.
Overall, Bank Indonesia expects a BOP surplus in 2024, underpinned by a persistent capital and financial account surplus in line with maintained foreign capital inflows given the positive investor perception of the promising domestic economic outlook along with attractive yields on financial assets for investment.
In Indonesia, the projected Net Interest Income in the Banking market for 2024 is estimated to reach US$46.78bn. Traditional Banks are expected to dominate the market with a projected market volume of US$43.22bn by 2024.
Net non performing assets (NPAs) also fell from 1.7% of total assets in FY22 to 0.97% as of March 2023 and further to 0.78% as of September 2023. Banks continued to improve their margins. Net interest margins (NIMs) rose from 2.92% in FY22 to 3.16% in FY23.
Country risk in Indonesia is low to moderate. Indonesia has an investment grade credit rating and an OECD country credit grade of 3. This indicates a low to moderate likelihood that Indonesia will be unable or unwilling to meet its external debt obligations.
Indonesia's Economic Growth to Ease Slightly in 2024 as Commodity Prices Soften. JAKARTA, December 13, 2023 – Indonesia's economic growth remains resilient, with inflation on a declining trend, and a stable currency, the World Bank said in its semi-annual Indonesia Economic Prospects report.
About 80% of Indonesia's 275 million population are unbanked and underbanked. 1 Yet, smartphone penetration in Indonesia is relatively high at 80% of the population.
The economy of Indonesia is a mixed economy with dirigiste characteristics, and it is one of the emerging market economies in the world and the largest in Southeast Asia. As an upper-middle income country and member of the G20, Indonesia is classified as a newly industrialized country.
Meanwhile, he added, Indonesia's Gross Domestic Product (GDP) will grow from Rp15,400 trillion to Rp24,000 trillion by 2030. “Indonesia's GDP will reach Rp323 trillion or 55 percent bigger than ASEAN's GDP, and the figure will increase to Rp417 trillion by 2030,” he added.
Which is the most profitable bank in Indonesia?
Major banks in Indonesia achieved their highest-ever net profit records in 2023. Bank Rakyat Indonesia (BRI) reported the largest profit at Rp 60.1 trillion, marking a 17.5 percent year-on-year increase, followed by Bank Mandiri with a profit of Rp 55.1 trillion, showing a robust growth of 33.7 percent.
The top 5 banks in Indonesia aggregated their net profits from USD 2.68 billion in Q3 2022 to USD 3 billion in Q3 2023. The top 3 – Bank Mandiri, BRI and BCA reported combined net profits of USD 2.57 billion (86% of overall net profits) in Q3 2023.
As of the third quarter of 2023, Bank Mandiri was the largest bank in Indonesia in terms of assets.
Earlier last year Silicon Valley Bank failed March 10, 2023, and then Signature Bank failed two days later, ending the unusual streak of more than 800 days without a bank failure. Before Citizens Bank failed in November 2023, Heartland Tri-State Bank failed July 28, 2023 and First Republic Bank failed May 1, 2023.
2023 almost went down in the history books as the year America lost faith in its banks. Over a few weeks in the spring of 2023, multiple high-profile regional banks suddenly collapsed: Silicon Valley Bank (SVB), Signature Bank, and First Republic Bank.
Foreign investors find that restrictive regulations, legal and regulatory uncertainty, economic nationalism, trade protectionism, and vested interests complicate the investment climate. Foreign businesses may be expected to partner with Indonesian companies and to manufacture or purchase goods and services locally.
According to the World Bank's October 2023 economic report, Indonesia's economic growth is underpinned by a pick-up in private consumption and positive terms-of-trade. GDP growth is projected at 5.0 percent in 2023 and to an average of 4.9 percent over the medium term in 2024-2026.
Indonesia's AML Risk Profile
Several international indicators assess Indonesia's vulnerability to money laundering: United States Dept of State Money Laundering Assessments, FATF 40 + 9 Recommendations, and Corruption Index: These assessments classify Indonesia as a higher-risk jurisdiction.
The country is a major exporter of crude petroleum and natural gas. In addition, Indonesia is one of the world's main suppliers of rubber, coffee, cocoa, and palm oil; it also produces a wide range of other commodities, such as sugar, tea, tobacco, copra, and spices (e.g., cloves).
However, based on the rapid development of modernization and globalization, countries that were used to be considered as Third World countries achieve big economic growth, such as Brazil, India, and Indonesia, which can no longer be defined by poor economic status or low GNP today.
What is the average income in Indonesia?
The average annual salary in Indonesia is 146,000,000 Indonesian Rupiah (IDR) or 9,872 US Dollars (according to the exchange rates in May 2023). This figure is relatively low when compared to the average salaries of other countries. In this article, we'll discuss the average salary in Indonesia.
With only 50-60 million Indonesians, out of a total population of 250 million, estimated to have bank accounts and, by our estimates, between 96 million and 114 million actual mobile subscribers, mobile telephone networks look to have a huge potential to provide – and extend the provision of – financial services.
Poverty Data: Indonesia
In Indonesia, 9.5% of the population lived below the national poverty line in 2022. In Indonesia, the proportion of employed population below $1.90 purchasing power parity a day in 2022 is 2.3%.
In 2021, 51 percent of respondents in Indonesia owned an account at a financial institution. The same survey also stated that 76 percent of individuals worldwide owned an account at a bank or a regulated institution like a credit union, a microfinance institution, or a provider that offers mobile money services.
Indonesia is a diverse and vibrant country with a rich cultural heritage and stunning natural beauty. It offers a unique lifestyle for foreigners who choose to live and work there.
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