BANDUNG - Our Financial Services Authority (OJK) Board of Commissioners (RDK) Meeting (25/10) assessed that the stability of the financial services sector is still in a maintained condition, amid uncertainty in the global financial market.
Continued trade war between the US and China is projected to reduce world trade and growth volumes. Meanwhile, the move by the Fed to raise the Federal Fund Rate (FFR) is projected to influence liquidity tightening in the global financial market.
Both of these encourage the International Monetary Fund to reduce estimates of global economic growth in 2018 and 2019 from 3.9% yoy to 3.7% yoy in October. These external dynamics also influenced the performance of the domestic financial market.
As of October 19, 2018, the Composite Stock Price Index (CSPI) recorded a weakening of 2.3% in real terms with non-resident investors registering a net sell of Rp 5.3 trillion. While in line with the stock market, in the Government Securities (SBN) market, non-resident investors in the Government Securities (SBN) market also recorded net sell of Rp 0.8 trillion mtd. SBN yields on short, medium, and long-term tenor yields rose again by 13 bps, 53 bps and 23 bps mtd respectively.
Through the OJK Central press release, it was mentioned that the yield increase was in line with the weakness in other Emerging Markets financial markets. External dynamics are still increasing. In line with the stock market, non-resident investors on the SBN market also still recorded a net buy sell of Rp 0.8 trillion mtd.
Amid continued volatility in the financial market, the performance of the financial services sector intermediation in October, September 2018 generally remained positive. Banking credit and financing receivables grew by 12.69% yoy and 6.61% yoy respectively.
In terms of raising funds, banking Third Party Funds (TPF) grew by 6.60% yoy. Life insurance premiums and general insurance / reinsurance as of September 2018 were recorded at Rp 141.14 trillion and Rp 62.74 trillion respectively. While in the capital market, in the period January to October 22, 2018, the collection of funds through stock public offerings, rights issues and corporate debt funds collected by corporations has reached Rp 143 trillion, with new issuers amounting to 50 companies. Total investment managed funds were recorded at Rp 739.95 trillion, an increase of 7.89% compared to the end of 2017.
The risk profile of financial services institutions is also maintained at manageable levels. The gross Non-Performing Loan (NPL) ratio of the banking sector was 2.606%, while the ratio of Non-Performing Financing (NPF) to finance companies was at 3.17%.
Meanwhile, the capital of financial services institutions is recorded at a fairly high level. The bank's Capital Adequacy Ratio as of September 2018 was recorded at 23.33%, while the Risk-Based Capital of the general insurance and life insurance industries was 315% and 430% respectively.
The dynamics of the financial market are expected to continue as the downside risks remain at the global level, including the continuation of a trade war and tightening liquidity. Going forward, OJK will continue to monitor these developments, so as not to disturb financial system stability and the performance of the financial services sector. Jo