Rating agencies like Standard & Poor's expect for Indonesia's banks that their loan book (hence their profitability) will be hit again by rising loan loss provisions as:
- Special Mentioned Loans (SML's) for financially struggling companies are expected to rise to 6-8% in 2016 (5.9% in 2015)
- Non-Performing Loans (NPL's) to rise to 3-4% in 2016 (2.7% in 2015)
As a consequence Indonesian banks are in general very reluctant to grow their loan book further at the moment - even for financially acceptable companies - which means that many Indonesian companies face now a severe credit crunch.
PRIME Consultancy is supporting European manufacturers by arranging financing for their Indonesian buyers via Export Credit Agency (ECA) financing schemes. Being able to offer an offshore funding alternative is therefore a valuable sales argument for our clients. Precondition is that the Indonesian buyers are financially sound and most of the equipment is manufactured in an European country.