JAKARTA, March 28 (Xinhua) -- Banking sector in Indonesia logged a higher loan growth in February as prospect of slowing U.S. and global economy has pushed capital to flow into emerging market.

Indonesian Financial Services Authority (OJK) unveiled on Thursday that loan growth accelerated 12.3 percent in February year-over-year, compared with 11.9 percent annualized growth in January.

The expansion was factored by higher growth of credits for investment and working capitals, said Yohannes Santoso Wibowo, deputy commissioner for stability of financial system of the OJK.

"The growth occurred along with the people's confidence to carry out business expansion. This suggests a good outlook of credit," he said adamantly.

The official cited that the higher growth of both investment credit and working capital credit would help generate economic activities in the country.

"These will create a better multiplier effect," Santoso said.

On non-performing loan growth, the official said, it touched 2.59 percent in February with banks' capital adequacy ratio drifting higher 23.86 percent.

Indonesian central bank has set a 12 percent loan growth target by this year end after taking four times pauses on hike of its benchmark interest rate since December, saying that the rate nearly reach its peak.

The U.S. Federal Reserve signal of dovish tone for this year amid narrowing spread, between the U.S. 10-year and 3-months treasury and long term treasury has push capital to flow into emerging market.

The Southeast Asia's biggest economy is looked to accelerated at a faster pace this year, 5.4 percent after registering 5.17 percent expansion last year.