Indonesian bank funding splits as gov't liquidity masks pressures

SOE banks are relying more on government money than deposit growth.

Indonesian banks registered resilient net profit growth in 2026 year-to-date, as funding profiles see an increasing share of government money, said UOB Kay Hian (UOBKH).

Bank Central Asia (BCA) and Bank Mandiri’s net profits grew by 5% year-on-year (YoY) and 19.9% YoY, respectively, in the first seven months of the year.

Bank Mandiri saw a 19.5% higher loan growth, higher than its 6.6% current account savings account (CASA) growth. BCA, meanwhile, saw loans grow slower than its CASA growth, at 8.4% and 10.9%, respectively.

UOBKH analyst Posmarito Pakpahan said that this widening divergence increasingly reflects the difference between policy-supported balance sheet growth at state-owned enterprise (SOE) banks and organically funded growth at BCA.

Liquidity available to banks in Indonesia increasingly reflect two different sources, organic private sector deposits, and policy liquidity injected through government placements and Bank Indonesia incentives, Pakpahan said.

“We believe the distinction matters for profitability, as organically generated CASA is structurally cheaper and stickier than government placements or time deposits,” Pakpahan wrote.

Whilst government liquidity provides relief to SOE banks, repeated liquidity injections also highlight funding pressures, UOBKH said.

“Repeated liquidity injections also highlight the structural mismatch at SOE banks, where corporate, infrastructure and policy-related lending is expanding faster than organic deposit growth,” Pakpahan said.

The country’s big 5 SOE banks’ loan-to-deposit reached 91% in May 2026, above the industry’s 88.3%, with Bank Mandiri’s LDR at 94.8% in July.

“Looking forward, the key question is whether strong corporate and investment lending can eventually translate into broader economic activity and stronger organic deposit growth, which would help narrow the current gap between credit and funding growth,” Pakpahan said.