IndoNEWSian.com – However, its substantial portfolio of troubled loans will keep exerting pressure on its net interest margin.
Lembaga Pembiayaan Ekspor Indonesia (Eximbank) is anticipated to keep a ‘strong’ capital position, as per Moody’s ratings.
Capitalization Increased To 32.9% As Of March 2025 From 15.1% The Previous Year, Following An Idr5T Capital Infusion From The Government.
“We anticipate that the bank’s capitalization will stay strong at its present level over the coming 12 to 18 months. This stability is due to its weak internal capital generation being offset by a reduction in its total assets,” the rating agency stated.
Profitability has been restored in 2024, with the return on average assets increasing to 0.4%, following a significant loss of -24.6T in 2023.
The cost of credit has been lowered to 0.5% in 2024 from 23% in 2023.
It is anticipated that the bank’s net interest margin (NIM) will stay relatively low due to subdued loan growth and an elevated number of non-performing loans. The NIM could see slight improvement when the bank effectively expands its portfolio of good-quality loans while simultaneously decreasing the volume of troubled and restructured loans.
“As a result, we anticipate that the bank’s return on assets will stay subdued for the coming 12-18 months due to its ongoing practice of setting aside significant loan loss reserves as part of an assertive problematic loan disposal approach,” Moody’s stated.
The liquidity buffers at Eximbank are described as ‘slender,’ with cash and government security holdings sufficient to cover just 14.8% of debts due within the 12-month period starting from March 2025, according to the rating agency.
“Even though the bank is still vulnerable to outside market influences because of its dependence on wholesale financing, the risk associated with refinancing is reduced somewhat thanks to its nearly sovereign standing and robust ability to secure short-term bank funding,” the statement read.*
