Flush with cash transfers from the state-controlled Hajj fund, Indonesia's Islamic banks expect loan growth to triple in 2015.
The government will finish shifting more than 30 trillion rupiah ($2.3 billion) of the savings of Muslims planning a trip to Mecca to Shariah-compliant lenders from non-Islamic banks this year, a process that started in 2013. That will help drive credit growth to 25.8 percent, beating the 8.3 percent in 2014 and a 16.5 percent forecast increase in lending by both types of banks, according to estimates from the Financial Services Authority.
The Hajj money will reduce costs of capital, already the lowest in nine months, as credit demand is supported by a predicted cut in Bank Indonesia's policy rate. PT Bank Muamalat Indonesia, the second-largest Shariah lender, said it would boost loans to small- and medium-sized firms, and PT BNI Syariah plans to simplify consumer-finance approvals.