Bank Lending Surges 13.58%, but Margins Continue to Erode
Jakarta, CNBC Indonesia — National banking credit disbursement continued to accelerate through July 2026. However, the increasingly robust credit growth has yet to be matched by an improvement in banks’ margins and profitability.
The Financial Services Authority (OJK) recorded that banking credit in July 2026 reached Rp9,135 trillion, growing 13.58% year-on-year (yoy). This marks an increase compared with June 2026, when growth stood at 12.67% yoy.
OJK’s Chief Executive of Banking Supervision, Dian Ediana Rae, said banking intermediation performance continued to strengthen, with an increasingly solid growth trajectory.
“Banking intermediation performance continues to improve with increasingly solid growth. Credit growth in July 2026 rose 13.58% year-on-year,” Dian said at a press conference for the OJK Board of Commissioners Meeting for August 2026 on Monday (7/9/2026).
By type of use, investment credit was the main engine of credit growth. Investment credit grew 25.13% yoy, well above working capital credit growth of 11.04% yoy and consumer credit, which grew only 5.38% yoy.
By debtor category, corporate credit grew 22.10% yoy. Meanwhile, MSME credit continued its positive trend with growth of 1.62% yoy, up from 1.05% yoy in June 2026.
By ownership, state-owned bank (BUMN) credit recorded the highest growth at 16.95% yoy.
Meanwhile, amid this credit expansion, banking margins continued their downward trend.
OJK recorded that the banking net interest margin (NIM) in July 2026 stood at 4.32%, down from 4.34% in June 2026. Compared with July 2025, the decline was even deeper, having fallen from 4.57%.
Thus, whilst credit grew at double digits and even reached 13.58% yoy, banks’ net interest margins continued to narrow.
Similar pressure was evident in profitability. The banking return on assets (ROA) fell to 2.45% in July 2026 from 2.47% in June 2026. In July 2025, the banking ROA stood at 2.56%.
Nevertheless, the credit expansion has yet to show any significant pressure on asset quality. The gross NPL ratio was recorded at 2.10%, only slightly up from 2.09% in June 2026.
Meanwhile, the net NPL actually improved to 0.81% from 0.82%. The Loan at Risk (LAR) ratio also fell to 8.39% from 8.47% in the previous month.
In terms of capitalisation, the banking industry’s resilience remains strong. The Capital Adequacy Ratio (CAR) rose to 23.84% from 23.70% in June 2026.
Liquidity also remains adequate, with the Liquid Assets to Non-Core Deposits ratio (AL/NCD) at 102.45% and the Liquid Assets to Third-Party Funds ratio (AL/DPK) at 23.10%. Both remain well above their respective thresholds of 50% and 10%. The Liquidity Coverage Ratio (LCR) stood at 187.5%.