The latest guidance from Indonesia’s banking sector points to a cautious outlook for 2025. This is not surprising, given the ongoing macroeconomic uncertainties. In this note, we review recent performance and forward guidance from the country’s top five banks: Bank Central Asia (BBCA), Bank Mandiri (BMRI), Bank Rakyat Indonesia (BBRI), Bank Negara Indonesia (BBNI), and Bank Syariah Indonesia (BRIS).

Fig 4. FY25F Financial Guidance of Top 5 Banks

Banks are expected to adopt a defensive stance this year, responding pragmatically to the challenging environment. Since Q4 2024, loan growth targets have been revised downward. BBCA, BBRI, and BBNI are guiding for sub-10% loan growth in FY25—signaling a more cautious posture focused on liquidity preservation. Note that loan growth has averaged 11.1% over 2021–2024, in the post-COVID recovery period. The cautious posture aligns with broader macro trends, amid downward revisions to Indonesia’s GDP growth forecast for 2025.  

Fig 5. Loan Growth, Deposit Growth, Loan to Deposit (LDR) Ratio of Top 5 Banks 

A key concern remains funding. Deposit growth has slowed considerably, widening the gap with loan growth and keeping loan-to-deposit ratios (LDR) elevated. In Q1 2025, deposit growth slowed to 6.0% YoY (vs 10.5% in Q1 2024), pressured by competition from alternative high-yielding instruments such as Bank Indonesia Rupiah Securities (SRBI). This has tightened liquidity conditions and prompted banks to reassess funding strategies.

Fig 6. Loan Disbursement by Segment of Top 5 Banks

Meanwhile, loan growth also decelerated, averaging 11.7% YoY in Q1 2025 across the top five banks (vs 14.3% in Q1 2024). The wholesale segment led the growth at +15.7% YoY, while the retail segment lagged at +7.1% YoY. SME loan growth remained weak at just 4.8% YoY. These trends suggest banks are prioritizing risk-adjusted returns and asset quality over aggressive expansion, especially in the face of constrained funding.

Fig 7. NPL Breakdown by Segment of Top 5 Banks

Despite a challenging environment, asset quality remained broadly stable. The gross non-performing loan (NPL) ratio stood at 2.1% in Q1 2025, slightly above 1.9% in Q4 2024. However, the performance varied by segment. While wholesale portfolios showed signs of improvement, Micro and SME segments continued to experience strain. Looking ahead, NPLs are expected to remain manageable in 2025, though banks that pursued aggressive growth last year may face increased credit risk.

Net interest margins (NIMs) are under pressure, weighed down by softening asset yields and rising funding costs—particularly across most banks except BBRI. In response, banks are likely to remain conservative, focusing on lower-risk corporate clients while selectively targeting higher-margin commercial opportunities. Retail and MSME lending are expected to remain a lower priority in the near term as banks focus on preserving asset quality and balancing growth with profitability.

While the overall tone remains defensive, several developments may ease near-term funding pressures:

• SRBI Maturities: IDR 774 trillion in maturities in 2025 could support deposit growth, though risks remain from competing high-yield government instruments.
• Fiscal Stimulus: Revisions to the state budget may inject additional liquidity into the banking system.

Danantara Dividends: Expected to remain in SOE bank deposits, rather than being diverted to Bank Indonesia accounts, providing further liquidity support.