Banks on Alert for NPLs
Monday, 26 November, 2007 | 15:55 WIB

Tempo Interactive, Jakarta: Banking circle are on the alert for an increase in non-performing loans (NPLs) from debtors whose use of fuel oil use in the production process is high.

This is because the NPL risk from such debtors has the potential to increase in line with the rise in world oil prices that have almost reached US$100 per barrel.

“Now we're very intensive in monitoring customers who use a lot of fuel oil,” said Sigit Pramono, Head of the National Bank Association, in Jakarta yesterday (25/11).

Sigit explained that the high world prices for oil and industrial fuel would influence increases in production and distribution costs.

This had the potential of disrupting companies’ finance and credit repayments.

“We'll increase monitoring of our customers whose energy costs have been identified as the largest in production cost components,” he said.

Previously, it had been reported that oil prices had made national banks careful in disbursing corporate credit.
Currently, banking circles have started analyzing which industry sectors will experience the largest impact.

Tigor M. Siahaan, Citibank's Managing Director for Market and Banking, also stated that Citibank was being careful in providing credit for the corporate sector because of the possibility of companies’ financial capability going down due to the fuel oil price increases.

EKO NOPIANSYAH
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