KEY RISK INDICATORS AFFECTING NON-PERFORMING LOANS IN MORTGAGE (A CASE STUDY OF PT. BANK PAN INDONESIA, TBK. IN 2009 - 2013)

Abstract

Mortgage lending in Indonesia met the growing market demand, as the demand increase, the potential risk may increase as well. Non-Performing Loans (NPLs) is one of indicators to determine bank performance. The high number of NPLs in the banking system will result in banking failures. Therefore, Key Risk Indicators (KRIs) affecting it are being identified. In this qualitative study, the researcher would like to analyze the KRIs affecting NPLs in mortgage. There are three kinds of aspects to be categorized, bank aspect, customers aspect, and economic aspect. In this study, the researcher used case study of PT Bank Pan Indonesia, Tbk in 2009-2013. Data were collected through primary data that obtain from interview and observation by using non-probability sampling and through secondary data that obtain from literature study. Moreover, data triangulation method and coding are used to analyze the data collection. The result of this study based on in-depth interview with key informant is that key risk indicators affecting non-performing loans in mortgage based on bank aspect are technical incompetency of Account Officers in assessing credit, lack of supervising and monitoring from management, and vested interest from high level of management. Based on customers aspect, incomplete credit information, illegal activity in the business of the debtor, and no clear source of funds to installed the loan. Inflation, government‟s policy, and sluggishness of property value are key risk indicators based on economic aspect that mostly occurs.