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HSBC’s investment banking head in Asia-Pacific took a six-month sabbatical beginning this month as part of chief executive Noel Quinn’s efforts to reshape the 155-year-old bank.
Gordon French, the Asia-Pacific head of its global banking and markets business and one of its highest-paid bankers in the region, began a sabbatical on April 15 and is expected to explore “other opportunities” within the group when he returns, according to an internal memorandum seen by the South China Morning Post.
The move is part of a realignment of the investment bank that would see regional head roles split between its global banking operations and its markets and securities services business.
Thierry Roland, the regional head for the business in Europe, will head the bank’s newly created RWA Optimisation Unit, which will dispose of assets that do not meet the bank’s return expectations, according to the memo. Andre Brandao will serve as the regional head for the Americas until the end of the year, with a further announcement expected later.
HSBC’s investment banking head in Asia-Pacific took a six-month sabbatical beginning this month as part of chief executive Noel Quinn’s efforts to reshape the 155-year-old bank.
Gordon French, the Asia-Pacific head of its global banking and markets business and one of its highest-paid bankers in the region, began a sabbatical on April 15 and is expected to explore “other opportunities” within the group when he returns, according to an internal memorandum seen by the South China Morning Post.
The move is part of a realignment of the investment bank that would see regional head roles split between its global banking operations and its markets and securities services business.
Thierry Roland, the regional head for the business in Europe, will head the bank’s newly created RWA Optimisation Unit, which will dispose of assets that do not meet the bank’s return expectations, according to the memo. Andre Brandao will serve as the regional head for the Americas until the end of the year, with a further announcement expected later.

KUALA LUMPUR – United Overseas Bank (Malaysia) Berhad (UOB Malaysia) menutup lapan daripada 45 cawangannya di seluruh negara bagi melindungi kesejahteraan pelanggan dan kakitangannya berikutan pandemik Covid-19.

Cawangan-cawangan yang terlibat ialah Jalan Imbi dan Medan Pasar di Kuala Lumpur; Kota Damansara, Shah Alam dan Ijok di Selangor; Raub dan Bentong di Pahang dan Sandaka, Sabah.

Penutupan itu bermula hari ini sehingga berakhirnya tempoh Perintah Kawalan Pergerakan.

UOB Malaysia berkata, penutupan cawangannya di Medan Pasar kerana berhampiran dengan kawasan Masjid India yang kini diletakkan di bawah Perintah Kawalan Pergerakan Diperketatkan (PKPD).

Meskipun penutupan itu, para pelanggan masih boleh mengeluarkan wang tunai melalui mesin ATM, cek dan mesin deposit syiling mulai jam 8 pagi hingga 8 malam, kecuali di cawangannya di Medan Pasar.

For those worried about the debt involved, including some Coalition MPs, the Reserve Bank Governor offers some reassurance.

Mr Lowe told Four Corners “we shouldn’t be worried” about the debt.

“It’s the right thing to do… we have the capacity to borrow, our interest rates are as low as they’ve ever been, the Australian Government has a long record of responsible fiscal policy, so the budget accounts are in reasonable shape. And if ever there’s a time to borrow, now is it,” he said.

There is, however, a gentle reminder to either side of politics who think they can avoid tough decisions in the future about this debt.

“That debt will have to be repaid at some future point, and that will constrain our choices. So we’ll have to confront that,” he said.

We still don’t know how much spending and therefore debt will be required to survive this crisis.

The Prime Minister is also flagging a “pro-growth” strategy on the other side to help get the economy up and running again. In other words, confronting the debt burden won’t be the immediate priority.

After stabilising the plane, those in the cockpit are now trying to work out how to land it.

The financial industry has urged the public and small and medium enterprises (SME) to be aware of scam syndicates deploying tactics to deceive unsuspecting victims.

The scam may result in monetary losses and risk compromising victims’ sensitive banking details and confidential information, said the financial sector in a joint statement today.

The industry comprises the Association of Banks in Malaysia (ABM), the Association of Islamic Banking and Financial Institutions Malaysia (AIBIM) and the Association of Development Finance Institutions of Malaysia (ADFIM).

They said the syndicates’ latest modus operandi includes impersonating bank officers and/or bank representatives who engage with unsuspecting victims via email, phone call, short message service (SMS) and/or social messaging platforms such as WhatsApp or other online messenger services.

“The scammers used the pretext of facilitating financial aid and/or assisting in loan application preparation and securing financing involving the stimulus package and special relief measures such as the Special Relief Facility as announced by Bank Negara Malaysia and the financial institutions,” it said.

The associations said financial institutions and/or banks did not appoint nor engage third parties or agents for the process of securing loans.

“Hence, individuals and businesses are strongly advised not to pursue loan applications and/or divulge sensitive and confidential information to individuals or companies claiming to be third party appointees or agents from the financial industry,” it added.

The public and businesses seeking financing are advised to get in touch with the banks or financial institutions directly to apply for loans to avoid being deceived by the unscrupulous syndicates.

“Alternatively, SMEs can also seek legitimate financing options via the imSME.com.my online platform, whereby, the platform will match your financing needs with the financial institution best suited to your requirements.”

The public is also advised to be wary of calls or messages purportedly from bank officials, the police, income tax department, the courts or other government agencies demanding your personal banking information.

“Banks and/or financial institutions will never ask you for your personal banking information such as Transaction Authorisation Code (TAC) or Personal Identification Number (PIN) or your online login username and password,” the financial industry collectively said.

They said businesses and members of the public are reminded to refer to the financial institutions and/or banks’ official websites or contact their customer service directly for information, verification and clarification.

김남권 성서호 기자 = 산업은행, 기업은행[024110], 수출입은행 등 금융 공공기관의 올해 경영실적평가 때 신종 코로나바이러스 감염증(코로나19) 사태 대응으로 나빠진 건전성 지표를 반영하지 않는다.

금융위원회는 2020년 금융 공공기관 경영실적평가에서 코로나19 대응에 따라 생길 수 있는 불이익을 완화해 평가할 방침이라고 19일 밝혔다.

코로나19 대응으로 악화할 수 있는 자기자본이익률(ROE), 이익 목표 달성도 등 수익성 지표와 유동성 커버리지 비율, 국제결제은행(BIS) 비율 등 건전성 지표가 평가 대상에서 빠진다.

정부 정책 이행 노력을 평가할 수 있는 비계량 지표는 신설된다.

금융위는 또 금융 공공기관의 코로나19 대응에 따른 업무증가로 발생하는 직원 초과근무 수당 등이 원활히 지급될 수 있도록 예산집행 방침도 조정하기로 했다.

코로나19 대응에 따른 초과근무 수당은 경영실적 평가지표인 ‘총인건비 인상률(평가연도 인건비-전년도 총인건비/전년도 총인건비)’ 산정 때 제외한다.

금융위는 아울러 산업은행의 순안정자금 조달비율(NSFR: 안정 자금 조달 필요금액 대비 안정 자금 가용금액) 규제를 완화해준다.

산은은 순안정자금 조달비율을 100% 이상을 유지해야 하는데 내년 6월 말까지 90%까지 떨어지더라도 제재를 받지 않는다.

안정자금 인정 비율이 상대적으로 낮은 산업금융채권(산금채) 발행 이후 산은의 NSFR이 하락할 것에 대비한 조치다.

정부의 민생·금융안정 패키지 프로그램에서 산은은 산금채로 자금을 조달하고 있다.

윤창호 금융위 금융산업국장은 “산은을 포함한 공공금융기관들이 자체 자본 비율을 바탕으로 코로나19 대응에 적극적인 역할을 하고 있다”며 “적극적인 기업 여신 공급으로 자기자본비율이 하락하는 경우 정부가 손실을 보전해서 자기자본비율을 보전할 계획”이라고 말했다.

HDFC Bank Ltd. reported net income growth of nearly 18% and ramped up bad loan provisions in the latest quarter, a period marked by the bailout of another bank as well as the imposition of a nationwide lockdown to stop the spread of coronavirus.

Analysts remain bullish on HDFC Bank, with an average rating of 4.76 on a Bloomberg scale where 5 is a unanimous buy. The lender is seen being able to better withstand the pandemic impact due to its position as a market leader. Its shares are down 28% this year, the least of all Nifty Bank Index members.

“HDFC Bank’s business growth remains robust despite economic activity getting impacted due to the Covid-19 outbreak,” Nitin Aggarwal, an analyst with Motilal Oswal Financial Services Ltd., said in a note. “A strong liability franchise will support margins, while higher liquidity levels would enable the bank to ride the current crisis and gain further market share.”

The bank’s net income rose to 69.3 billion rupees ($907 million) in the quarter ended March 31, compared with an average 72.5 billion rupees estimate in a survey of eight analysts. Provisions against soured debt jumped to 37.8 billion rupees from 18.9 billion rupees a year ago.

Despite the optimism over HDFC Bank, market participants remain cautious on the sector overall. India financials have been reeling from a shadow-banking crisis that culminated in the Yes Bank Ltd. bailout. The pandemic struck just as lenders were about to see signs of stability. The Reserve Bank of India has moved to further ease liquidity and bad-loan rules to keep funds flowing through the economy.

“If a bad loan cycle begins for retail, the fear psychosis of taking risk off the table will reduce the credit to the segment,” said Kenneth Andrade, chief investment officer at Old Bridge Capital Management Ltd, overseeing assets of $400 million.

Here’s a roundup of analyst comments on HDFC Bank’s results:

Axis Capital Ltd. (Manish Karwa)

• Growth likely to be steady despite bank’s tightening of its credit filters resulting in higher rejections of loan applications.
• Rural strategy on track; investment in digital is leading to strong build-up of deposit base.
• Reduces growth estimates for both loans and fee income as retail will slow down sharply.
• Rated buy, price target 1,250 rupees

ICICI Securities Ltd. (Sandeep Joshi)

• HDFC Bank better positioned to weather the storm; however, in times of economic dislocation, it is sensible to remain conservative.
• Expects bank’s loan growth to moderate to 12%, net interest margin to contract by 9 basis points and credit cost to be elevated at 1.7% in FY21.
• Near-term earnings impact doesn’t overshadow bank’s balance sheet strength, competitive advantage.
• Maintains buy with price target cut to 1,339 rupees from 1,604 rupees

Prabhudas Lilladher (Pritesh Bumb)

• Contingency provisions to cushion shocks from nasty surprises; early part of FY21 remains uncertain on business & asset quality.
• Bank stress tested its loan portfolios and things are quite manageable; confident on its risk assessment process.
• Retains buy with price target lowered to 1,105 rupees from 1,124 rupees

Kotak Institutional Equities (M.B. Mahesh)

• Early commentary on impact of coronavirus is not as bad as expected.
• Valuations attractive.
• Bank well positioned to navigate crisis despite larger exposure than peers to some sectors that could be impacted by economic downturn.
• Maintains buy with fair value unchanged at 1,050 rupees

S&P Global Ratings’ downgrade of Indonesia’s outlook is not a reflection of fundamental economic problems, central bank Governor Perry Warjiyo said, stating that policy steps taken in response to the coronavirus pandemic will help to restore the nation’s financial trajectory.

The comments from the Bank Indonesia chief come after S&P cut its outlook for the nation to negative from stable, while affirming its long-term foreign currency debt rating at BBB, the second-lowest investment grade score. The change was to reflect “additional downside risk to the government’s fiscal and external metrics” from the pandemic, S&P said on Friday.

“The lingering economic and financial uncertainty is a global phenomenon and Indonesia is one of many countries that have taken policy responses in the area of fiscal, monetary and financial policy to mitigate the negative impact of the spread of COVID-19,” Perry wrote in a statement.

The various policy steps taken by authorities “will be able to restore Indonesia’s economic trajectory, in terms of growth, external, and fiscal towards a more sustainable level in the not too distant future,” he added.

Indonesian policy makers have announced a series of emergency measures in recent weeks as the coronavirus pandemic takes a toll on the economy. President Joko Widodo has unveiled stimulus packages worth $28 billion, boosted Bank Indonesia’s powers and suspended a budget deficit cap to allow the government to boost spending. The central bank has cut rates twice this year and intensified its intervention in financial markets.

The move to suspend the fiscal deficit cap was seen as an “extraordinary” measure and “in response to a highly unpredictable, exogenous shock,” S&P said. Indonesia’s external position “has weakened following considerable depreciation of the rupiah, and the government’s debt burden will be materially higher over the next few years owing to strong counter-cyclical fiscal measures,” it added.

The pandemic is seen slowing economic growth in Southeast Asia’s biggest economy to 2.3 percent this year, compared with an initial estimate of 5.3 percent, Finance Minister Sri Mulyani Indrawati said at the start of this month.

Turning to unconventional tools, Bank Indonesia may start buying sovereign bonds directly from the government as early as next week — the first time it would be doing so.

The central bank is in the final stages of completing an agreement with the Finance Ministry that will allow it to buy rupiah-denominated bonds as a non-competitive bidder in the primary market, Warjiyo told reporters Friday.

The Reserve Bank of India’s (RBI) yet another attempt to persuade banks to bring pace in their lending activity to different industrial segments is expected to be a non-starter in post- COVID-19 situation. The central bank may have reduced the reverse repo rate by another 25 basis points (bps) to 3.75 per cent, disincentivising the banks to park their additional funds with the RBI, but it will be too much of optimism to expect banks’ lending to pick up because of this move. Though other measures announced by RBI Governor Shaktikanta Das to boost liquidity conditions, particularly for the Non-Banking Finance Companies (NBFCs), will prove to be a Big Bazooka with prudence and caution.

Dr. Joseph Thomas, Head of Research – Emkay Wealth Management said, “RBI has reaffirmed its commitment to support the economy and the markets and has announced an additional Rs.50,000 Crore TLTRO (Targeted Long-Term Repo Operation). This would be targeted at supporting corporate and smaller private entities. But the issue is that there no lending by banks nor any investment into sectors that require more support. Banks are parking with RBI on a daily basis, an amount close to Rs. 6 Lakh Crore. So whatever money they have with them and whatever they are getting from the RBI, the banks are giving back to the RBI instead of investing it or lending it. The reverse repo rate cut is to discourage thus reverse flow to the RBI. But is doubtful whether this flow can be stemmed easily. Banks are not lending or investing because they fear that under the current conditions they may be adversely impacted if they employ the money for investments or lending. Even three months back the approach of the banks was one of extreme caution”.

RBI’s relief package 2.0 announced on Friday is also expected to benefit the NBFCs and the real estate sector as it is intended at easing liquidity concern of these sectors in a big way.
Sundar Sanmukhani, Head of fundamental research, Choice broking said, “RBI’s latest announcements to infuse liquidity and expand bank credit are expected to provide big relief to the Non-Banking Financial Sector (NFBCs) as 50 per cent of the proposed TLTRO worth Rs 50,000 crore will be invested in small and mid-sized NBFCs and MFIs. The Central Bank has also relaxed NPA recognition norms for NBFCs”.

Dr. V K Vijayakumat at Geojit Financial Services said, “RBI has come out with announcements with far-reaching beneficial consequences to the financial system. Refinancing of Rs 50,000 crore to NABARD, SIDBI and NHB is another welcome move. The reclassification of NPA norms from 90 days to 180 days is a great relief to commercial banks. In brief, this is a big bazooka but with caution and prudence. Enhancement of Ways & Means Advances (WMA) to states by 60 per cent will be a relief to states stressed by the pandemic.”

Jaspal Bindra, Executive Chairman, Centrum Group said, “The RBI has shown pragmatism while announcing the second round of measures, aimed at maintaining liquidity and incentivizing credit flows. Additionally, the 90 day NPA norm won’t be applicable to loans where the moratorium is granted. This along with 1 year extension on loans given to the real estate sector will help preserve asset quality”.

Deepthi Mary Mathews, Economist, Geojit Financial Services, said, “In a span of 20 days, RBI announced the second round of liquidity boosting measures, with special focus on NBFCs and MFIs. TLTRO and reduction of reverse repo rate to 3.75 percent is expected to improve liquidity in the NBFC sector. Similarly, the loan given by the NBFCs to real estate to get similar benefits as given by commercial banks is a support to both the NBFC and real estate sector.

张国庆、车延飞、朱连科、吴耀强违法发放贷款罪一审刑事判决书

吉林省通化县人民法院
刑 事 判 决 书
（2020）吉0521刑初16号

公诉机关吉林省通化县人民检察院。
被告人张国庆，男，1971年9月29日出生，户籍所在地吉林省通化市东昌区，汉族，初中文化，原通化县农村信用合作社富江信用社主任（现通化海科农村商业银行富江支行），捕前住通化市东昌区。2014年3月20日因犯骗取贷款罪、违法发放贷款罪，被判处有期徒刑七年，并处罚金12万元；因犯违法发放贷款罪，于2018年8月2日被判处拘役三个月，并处罚金1万元，与前罪并罚决定执行有期徒刑七年，并处罚金人民币13万元。因涉嫌违法发放贷款罪，于2019年5月8日被通化县公安局刑事拘留；经通化县人民检察院批准，于2019年5月31日被通化县公安局逮捕，现羁押在通化县看守所。
辩护人姜凤，吉林方维律师事务所律师。
被告人车延飞，男，1984年10月5日出生，汉族，大专文化，党员，原通化县农村信用合作社富江信用社信贷员，个体业主，户籍所在地吉林省通化县，住长春市二道区。2014年1月14日因犯违法发放贷款罪被免予刑事处罚；2016年3月24日因犯违法发放贷款罪被免予刑事处罚。因涉嫌违法发放贷款罪，于2019年12月3日被通化县公安局取保候审；于2019年12月9日被通化县人民检察院取保候审。
被告人朱连科，男，1957年3月22日出生，满族，初中文化，党员，原通化县农村信用合作社富江信用社信贷员（已退休），户籍所在地吉林省通化县，住通化县。2014年1月14日因犯违法发放贷款罪被免予刑事处罚。因涉嫌违法发放贷款罪，于2019年12月3日被通化县公安局取保候审；于2019年12月9日被通化县人民检察院取保候审。
被告人吴耀强，男，1964年3月2日出生，满族，初中文化，通化海科农村商业银行富江支行员工（原通化县农村信用合作社富江信用社信贷员），户籍所在地吉林省通化县，住通化县。2014年1月14日因犯违法发放贷款罪被免予刑事处罚。因涉嫌违法发放贷款罪，于2019年12月3日被通化县公安局取保候审；于2019年12月9日被通化县人民检察院取保候审。
辩护人赵民，吉林昱诚律师事务所律师。
吉林省通化县人民检察院以通县检一部刑刑诉[2020]1号起诉书指控被告人张国庆、车延飞、朱连科、吴耀强犯违法发放贷款罪，于2020年1月20日向本院提起公诉。本院受理后，依法适用简易程序，由审判员白玉林担任审判长，与审判员于丽娜、邓凤文组成合议庭，于2020年3月3日公开开庭审理了本案，通化县人民检察院指派检察员贺娟出庭支持公诉，被告人张国庆及其辩护人姜凤、被告人车延飞、朱连科、被告人吴耀强及其辩护人赵民均到庭参加诉讼，本案现已审理终结。
经审理查明：2008年1月至2012年1月，被告人张国庆在任通化县农村信用合作社联社富江信用社（现通化海科农村商业银行富江支行）主任期间，在明知不符合贷款规定的前提下，指使借贷员被告人车延飞、吴耀强、朱连科违规向李某1、李某2、毕某、朴某、侯某、宋某、罗某等人违规发放顶名贷款金额共计人民币5646.8万元。其中被告人车延飞参与发放贷款人民币3426.8万元；被告人朱连科参与发放贷款人民币776万元；被告人吴耀强参与发放贷款人民币881万元。上述贷款已收回或达成还款协议共计人民币3736.5万元。案发后，被告人张国庆、车延飞、吴耀强、朱连科均如实供述了其违法发放贷款的犯罪事实。
被告人张国庆在公诉机关自愿签署了认罪认罚具结书，对公诉机关的量刑建议亦没有异议。
上述事实，被告人张国庆及其辩护人、被告人车延飞、朱连科、被告人吴耀强及其辩护人赵民在庭审中均未提出异议，并有户籍信息、贷款合同、贷款明细表、刑事判决书、情况说明等书证；证人孔某、代某等人的证言；被告人张国庆、车延飞、朱连科、吴耀强等人的供述与辩解等证据为凭，足以认定。
对被告人张国庆的辩护人提出张国庆本次犯罪的贷款数额系转贷形成，属于前罪遗漏部分，张国庆系坦白，可以从轻处罚。在公诉机关自愿签署认罪认罚具结书，可从宽处理的意见，经审查与事实相符，本院予以采纳。
对被告人吴耀强的辩护人提出吴耀强系坦白，可以从轻处罚；在共同犯罪中起次要、辅助作用，系从犯，可从轻或减轻处罚的意见，经审查与事实相符，本院予以采纳。
本院认为，被告人张国庆、车延飞、朱连科、吴耀强违反国家规定发放贷款，数额巨大，其行为均已构成违法发放贷款罪。公诉机关指控的犯罪事实清楚、证据确实、充分，指控的罪名成立，本院予以支持。鉴于张国庆系坦白，可以从轻处罚；认罪认罚可从宽处理；系在刑罚执行完毕前发现漏罪，应当数罪并罚。车延飞、朱连科、吴耀强均系坦白，且系从犯，可减轻处罚。鉴于张国庆对公诉机关的量刑建议没有异议，本院予以采纳；车延飞、朱连科、吴耀强违法发放贷款系受领导指使发放，且均系转贷产生，犯罪情节轻微，可免予刑事处罚。依照《中华人民共和国刑法》第一百八十六条、第二十五条、第二十七条、第三十七条、第六十七条第三款、第六十九条、第七十条、第四十五条、第四十七条、第五十二条、第五十三条之规定，经本院二〇二〇年第二次审判委员会讨论决定，判决如下：
一、被告人张国庆犯违法发放贷款罪，判处有期徒刑六个月，并处罚金人民币2万元；与原判有期徒刑七年，并处罚金人民币13万元并罚，决定执行有期徒刑七年，并处罚金人民币15万元。
（刑期从判决执行之日起计算，判决执行以前先行羁押的，羁押一日折抵刑期一日。即自2013年6月26日起至2020年6月25日止。）
二、被告人车延飞犯违法发放贷款罪，免予刑事处罚。
三、被告人朱连科犯违法发放贷款罪，免予刑事处罚。
四、被告人吴耀强犯违法发放贷款罪，免予刑事处罚。
五、追缴被告人张国庆违法所得人民币1775万元，其中返还干沟信用社543万元，返还富江信用社1232万元。
如不服本判决，可在接到判决书的第二日起十日内，通过本院或者直接向吉林省通化市中级人民法院提出上诉。书面上诉的，应当提交上诉状正本一份，副本二份。

审判长　　白玉林
审判员　　于丽娜
审判员　　邓凤文
二〇二〇年三月十六日
书记员　　赵金玥

The spread of COVID-19 is expected to hit Indonesian banks’ performance this year, but analysts remain hopeful that the industry will still be resilient enough to face the challenges the pandemic is bringing to the economy.

Moody’s Investors Service has downgraded Indonesia’s banking industry outlook, along with 11 other countries in the Asia Pacific region, to negative from stable over concerns of rising credit costs and declining profitability as the pandemic is disrupting the global economy.

“The coronavirus outbreak has weakened global demand and is increasingly disrupting domestic economic activity,” Moody’s wrote in a report published on April 2.

Its vice president senior credit officer of financial institutions group, Eugene Tarzimanov, further added during a webinar on Tuesday that the disruptions were expected to increase the bad loan ratio in the region, including Indonesia, as they weakened cash flows of small and medium enterprises (SMEs) and corporates in exposed industries, such as airlines, oil and gas and global shipping.

Although Bank Central Asia (BCA) economist David Sumual said on Wednesday that he could not determine how big the rise in the non-performing loan (NPL) ratio would be this year, he admitted that the ratio could increase further if the pandemic continued.

The Financial Services Authority (OJK) recorded gross NPL ratio at 2.79 percent in February, the highest level since May last year. Loan growth, meanwhile, stood at 5.93 percent in the month, reflecting the lowest expansion since November 2009, as demand plunged.

“If the pandemic continues in the next few months, the bad loan ratio could increase because economic activities would be disrupted for a longer period of time,” he told The Jakarta Post.

Such a warning was reflected in the Deposit Insurance Corporation’s (LPS) latest data showing that loan-at-risk stood at 11 percent, chairman Halim Alamsyah said during a hearing with the House of Representatives Commission XI overseeing financial matters. The figure is higher than the 10 percent rate last year.

Private-owned Bank Mayapada Internasional president director Haryanto Tjahjariadi echoed the sentiment, admitting that he expected to see an increase in bad loans as the coronavirus disease hampered economic activities in all sectors.

“However, we will try to maintain our NPL ratio at around the 3 to 3.5 percent this year,” he told the Post.

The rise in bad loan ratio is also expected to increase pressure on banks’ profitability, even on Indonesian banks, which are considered to be some of the most profitable in the world.

“Rising NPL will increase banks’ credit costs while their margins will also decrease due to the central banks’ low interest rates,” Tarzimanov said.

Bank Indonesia (BI) in March cut yet another 25 basis points off of the benchmark seven-day reverse repo rate to 4.5 percent. It also lowered the deposit facility rate to 3.75 percent and lending facility rate to 5.25 percent.

The lower rates are expected to transmit into lower banks’ interest rates, affecting consumer loans, corporate loans and mortgage interest rates. This will then translate to lower net interest margin (NIM), which usually determine a bank’s profitability.

Senior economist Aviliani said on Friday that banks’ NIM had already decreased in the past few years due to tight competition since the digital era.

Data from the Financial Services Authority (OJK) showed that banks’ NIM ratio stood at 4.91 percent in 2019, lower than the 2016 figure of 5.63 percent.

Given that the OJK has allowed more relaxed restructuring among debtors amid the pandemic, Aviliani said she expected banks’ NIM would further decrease.

Last month, the OJK issued a new regulation that relaxed debt quality assessment and restructuring requirements for debtors that are hit hard by the coronavirus pandemic, allowing them to assess the quality of a loan worth up to Rp 10 billion (US$637,795) based on only the debtor’s timeliness in paying the loan’s principal and interest.

“I think the NIM will significantly decline from April to June as the COVID-19 pandemic continues,” she said during an online discussion.

Despite the bleak outlook, she still expressed optimism that some banks could still record profits amid the less-than-favorable conditions.

“Banks that don’t rely heavily on interest income as their main revenue stream and have strong fee-based income can still book a profit despite today’s conditions,” she said.