Mergers are in progress. Four government banks have formed Bank Mandiri, No. 73 in the Asiaweek 500 and the biggest bank in Indonesia. IBRA hopes to sell Danamon next year, although analysts are skeptical about the prospects of a union of such weaklings. Much depends on political stability. Few corporate loans are being made even now.
Most banks focus on consumer loans and low-yield government bonds.
But the relatively low figure is based on a definition of a non-performing loan as one that is in default for six months, not three months as is the international norm. Banks there are being run by the same people who got them into the mess during the Crisis. Property values remain high despite the pre-Crisis glut in Kuala Lumpur and elsewhere. But he reckons that the NPL problem has stabilized. Indeed, banks have slowed down on loan-loss provisioning, which explains their hefty earnings.