"The slowing global economic growth and geopolitical conditions, such as the trade war and Brexit, continue to be the main sentiments that color the development of global financial markets. Meanwhile, the dovish policy of several central banks in developed countries has a positive impact on global liquidity, particularly emerging markets, including Indonesia," OJK Deputy Commissioner for Public Relations and Strategic Management Anto Prabowo noted in a statement in Jakarta on Friday.
Prabowo expounded in October 2019, the yield of Government Securities (SBN) recorded a gain of 25 basis points (bps) accompanied by a flow of non-resident investor funds touching Rp29.1 trillion. Hence, until November 22, 2019, the flow of non-resident investors to the SBN market had reached Rp175.6 trillion, accompanied by a stronger yield of 98.5 bps.
In the meantime, until the end of October, the stock market had gained 1.0 percent to reach 6,228.3. This strengthening was supported by domestic investors bearing in mind that non-resident investors had booked net sales of Rp3.8 trillion.
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However, global sentiment increased at the end of the third week of November 2019. The Indonesian Composite Index (IHSG) recorded a slight drop to 6,100.2, with net buy of non-resident investors worth Rp43.9 trillion.
In general, Prabowo remarked that the intermediary performance of financial service institutions based on data from October 2019 is still in accordance with developments in the domestic economy. Banking loans annually recorded a positive growth of 6.53 percent, backed by investment loans that continue to record double-digit growth at the level of 11.2 percent.
Accounts receivable financing was also still stable at 3.5 percent. In terms of fund raising, third-party funds (DPK) increased by 6.29 percent.
Moreover, during the January-October 2019 period, life insurance and general insurance managed to accrue premiums of Rp152.4 trillion and Rp82.2 trillion, respectively.
Until November 26, 2019, fund-raising through the capital market had reached Rp155 trillion, akin to the level of fund-raising in 2018. The number of new issuers during the period was 48 companies. There were 61 issuers, with indicative offer totalling Rp22.8 trillion.
Amid the increasing intermediation of financial service institutions, the October position of risk profile was still under control. The NPL ratio, or non-performing loans, rose slightly to 2.73 percent, but was yet far lower than the threshold.
The NPF ratio also registered a drop as compared to the earlier month, at the level of 2.5 percent. The banking exchange rate risk is at a low level, with the Net Open Position (NOP) ratio of 1.52 percent, far below the regulatory threshold.
Banking liquidity and capital are at an adequate level. Liquidity coverage ratio and non-core deposit ratio are at 199.14 percent and 87.83 percent, respectively, far above the threshold.
The capital of financial service institutions is maintained stable at a high level. Capital adequacy ratio was at 23.54 percent. Correspondingly, the Risk-Based Capital of the life insurance and general insurance industries amounted to 705 percent and 329 percent, respectively, far above the regulatory threshold.
Prabowo noted that the OJK will constantly monitor developments in the global economy and strive to mitigate the impact of unfavorable conditions on the performance of the domestic financial services sector, particularly regarding liquidity risk profiles and credit risk.
"The OJK will continue to coordinate with stakeholders to mitigate external uncertainties, maintain the contribution of the financial services sector in the national economy, and maintain financial system stability," he added.
EDITED BY INE