Banking Industry Fundamentals Solid, but Credit Acceleration Requires Demand-Side Strengthening, Says BRI Chief

Jakarta — Indonesia’s national banking industry retains solid capacity to support future credit growth, underpinned by strong and adequate liquidity and capitalisation. Nevertheless, the acceleration of credit disbursement currently faces challenges, particularly from the demand side, as the business community adopts a wait-and-see stance and purchasing power has yet to fully recover across all segments.

This view was expressed by the President Director of PT Bank Rakyat Indonesia (Persero) Tbk, Hery Gunardi, at the Economic Outlook 2026 event organised by the Financial Services Authority (OJK) on Thursday, 19 February. The event was also attended by OJK Acting Chairwoman Friderica Widyasari Dewi, Deputy Chairman of the National Economic Council Mari Elka Pangestu, and Standard Chartered Chief Executive Officer Donny Donosepoetro.

In his presentation, Hery explained that on a fundamental basis, the banking industry has adequate capacity to support future credit growth in a prudent and sustainable manner. On the liquidity front, third-party fund growth strengthened to 11.4 per cent year-on-year, with the Loan-to-Deposit Ratio maintained at approximately 84 per cent. Industry capitalisation also remains robust, with the Capital Adequacy Ratio standing at 26 per cent, well above the regulator’s minimum threshold.

“However, year-on-year credit growth through to December 2025 remained at single-digit levels. According to Bank Indonesia, one of the factors behind the current credit slowdown is demand-side driven,” said Hery.

Referring to Bank Indonesia data, new credit demand has declined across most segments, particularly in consumer lending which fell from 62.9 per cent to 13.4 per cent, and the MSME segment which dropped from 78.4 per cent to 58.8 per cent. Meanwhile, undisbursed loans have risen to an average of 10.22 per cent.

“This means that credit facilities already approved by banks, as well as available liquidity, are in fact still adequate — yet actual drawdowns are being held back. This condition reflects the cautious, wait-and-see attitude of both the business community and households as individual customers. The challenge, therefore, is not on the fund supply side, but rather in confidence and the business outlook going forward. What is needed is not merely additional liquidity, but a strengthening of business confidence so that expansion can resume,” Hery elaborated.