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Indonesia Eximbank’s Financial Woes: A Decade of Poor Loan Management
JAKARTA, [DATE] - Indonesia Eximbank (LPEI) has been plagued by poor loan management for years, with its non-performing loans (NPLs) rising above the 5 percent threshold set by the Financial Services Authority (OJK).
Financial Performance
According to LPEI’s financial statements, the bank’s total assets stood at IDR 108.702 trillion in 2022, while its total liabilities reached IDR 89.762 trillion. The bank’s net profit/(loss) also took a hit, with a net loss of IDR 4.695 trillion in 2022.
Poor Loan Management
LPEI’s financial woes have been attributed to poor risk management and the absence of sanctions, allowing its NPLs to balloon. As of 2020, the bank’s net NPL reached IDR 16 trillion, or 13 percent, while its gross NPL reached a staggering IDR 42 trillion.
Government Intervention
The government has injected IDR 28.7 trillion in state capital participation (PMN) into LPEI over the decade from 2010 to 2021 to strengthen the institution’s capital structure.
OJK Oversight
Several government sources have revealed that the cases at the Attorney General’s Office (AGO) involving LPEI are just the tip of the iceberg. The financial institution’s poor loan management has been going on for years, with officials often failing to consider borrowers’ financial performance before disbursing loans and providing insufficient collateral or expired insurance.
Examples of Poor Loan Management
At least nine business groups received substantial loans from LPEI, including Duniatex Group, which received IDR 3 trillion. However, the loan was approved for restructuring under a debt payment suspension (PKPU) scheme that was resolved amicably at the Semarang Commercial Court.
Financial Ratios
LPEI’s financial ratios also paint a grim picture. Its gross NPL ratio stood at 23.39 percent in 2022, while its net NPL ratio reached 13.96 percent. The bank’s capital adequacy ratio (CAR) was 17.32 percent in 2022.
OJK Warnings
The OJK has issued several warnings to LPEI over the years, including a warning letter in 2018. However, it seems that the financial institution’s poor loan management has continued unabated.
Conclusion
As Indonesia’s economy continues to grow, it is essential for financial institutions like LPEI to prioritize good governance and risk management practices to ensure the stability of the financial system.
Source: LPEI Financial Reports
What we’ve heard:
- Government sources have revealed that the cases at the AGO involving LPEI are just the tip of the iceberg.
- Poor loan management has been going on for years, with officials often failing to consider borrowers’ financial performance before disbursing loans and providing insufficient collateral or expired insurance.
- At least nine business groups received substantial loans from LPEI, including Duniatex Group, which received IDR 3 trillion.
- The OJK has issued several warnings to LPEI over the years, including a warning letter in 2018.