Indonesian banks face tight liquidity and soft loan growth in Q4
Large corporate loan books will keep their asset quality well-supported, said CreditSights.
Indonesian banks will continue to be constrained by liquidity and macro conditions in the last quarter of 2026, according to CreditSights by Fitch Solutions.
The third quarter period should have marked the banks’ net interest margin (NIM) lowest point, CreditSights said in an October report. Further loan repricing should offer some NIM support.
CreditSights expect funding costs to remain broadly elevated and liquidity tight, and loan growth momentum to remain soft in Q4.
“[Profitability] however should remain adequate, with large corporate books keeping asset quality well supported,” CreditSights said.
Funding shock in Q3 drove steep NIM compression, with Bank Mandiri’s falling 25 basis points (bp) compared to Q2, whilst Bank Negara Indonesia (BNI) saw 30 bp compression.
The government’s surprise announcement in June-July that it is withdrawing its deposits sparked intense deposit competition and lifted funding costs as well, CreditSights said.
Funding costs have since eased from their August peak but remain elevated given the continued weak sentiment towards Indonesia, it added.
Asset quality was broadly stable, whilst loan growth slowed for both banks.