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Indonesia: Banking grow th

Diversifying funding

sources: Corporate bonds

are becoming more popularin locally based banks

A crow ded retail market:

Competition gets more

intense as banks expand

access and services

Mongolia responds quickly to

banks insolvency

Papua New Guinea: Banks

eye rural areas for grow th

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S&P also reported that NPLs had fallen to 1.9% this year respectable by mos t international

standards from 6.1% in 2006; however, this should be s een in the context of rapid new loan

growth, rising incomes and lower interest rates.

Indonesia, like many of its neighbours, learned some lessons from the 1997-98 Asian financi

crisis , which came after several years of rapid economic and asset growth.

Fitch notes that Indonesian banks have substantial capital buffers and provisioning coverage,

addition to ample capacity to generate retained earnings all of which should help them weatshocks to the banking system and moderate rises in NPLs.

Fitch also praised Bank Indonesia (BI) for monetary tightening measures that have helped bol

the broader banking system agains t shocks. These included raising down payment conditions

home and motor loans last year.

We believe the central bank's proposal to tighten mortgage lending regulations together wit

interest rate hikes should take the s team out of the property market, the agency said.

The BI, under new governor Agus Martowardojo, may move to raise rates further later in the ye

inflation looks likely to overshoot its 7.8% target. Inflation is a s ignificant risk factor for Indonesicorrosive effect on earnings and savings being a challenge for policymakers in what is otherw

becoming a s table economy.

While the central bank is moving to reduce credit growth in certain areas, it is als o supporting

expansion of loans to small and medium-size enterprises (SMEs). In January BI issued a

regulation requiring all lenders including foreign and joint venture banks to direct 20% of th

loan book to SMEs by 2018, with interim m inimums set along the way. Foreign banks, which la

extensive branch networks and are mainly focused on corporate and consumer credit, may fin

difficult to comply with the new rule.

However, Indonesia remains an attractive emerging market for international lenders. It has apopulation of almos t 240m, one of the lowest banking penetration rates in the region, strong

domes tic demand that has powered growth during a period of uncertainty for the global econo

and political s tability. For banks that are able to serve untapped niches such as SMEs,

microcredit and sharia-compliant finance Indonesia shows promise.

The Report: Colombia

2013

The Report: Mexico

2013

The Report: Cote

d'Ivoire 2013

The Report: Oman

2013

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Outperforming the majority of its regional peers, Colombia has experienced

steady economic grow th in the past decade registering GDP grow th

averaging over 4%, a rate set to continue in 2013.

Read more

REPORT SUMMARY THE REPORT: COLOMBIA 2013

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