Indonesian Banking Performance Remains Solid Despite Rising Global Uncertainty
The Financial Services Authority (OJK) announced the results of its Q1 2026 Banking Business Orientation Survey (SBPO), which indicates that banking performance is expected to remain solid amid rising global uncertainty.
Dian Ediana Rae, Executive Head of OJK’s Banking Supervision, stated that confidence in solid banking performance is reflected in the Banking Business Orientation Index (IBP) for Q1 2026, which was recorded at 56, placing it in the optimistic zone. This optimism is driven by projected growth in banking performance and the belief that banks remain capable of managing risks despite expectations of rising inflation and currency weakening.
However, the survey also revealed predictions of weakening currency and rising inflation that depressed the Macroeconomic Condition Expectation Index (IKM) for Q1 2026, placing it in the pessimistic zone at 45. Confidence regarding accelerating inflation is driven by seasonal factors such as Ramadan, Eid al-Fitr celebrations, and Chinese New Year festivities, which typically increase prices of goods and services. Dian noted there is a low base effect from the previous year, as electricity tariff discounts applied in 2025 will not continue into Q1 2026.
The currency is also expected to weaken amid persistently high global geopolitical tensions. Nevertheless, Indonesia’s economic growth is projected to accelerate, driven by increased household consumption in Q1 2026.
The SBPO survey was conducted in January 2026, involving 93 bank respondents whose combined total assets represented 94.17 per cent of total general bank assets based on December 2025 data.
The majority of respondents believed that banking risks in Q1 2026 will remain manageable and controlled. This is reflected in the Risk Perception Index (IPR) at 57, placing it in the optimistic zone. This optimism is supported by confidence that credit quality will remain intact, Net Foreign Exchange Position (PDN) is at low levels, and foreign currency assets and receivables exceed foreign currency liabilities (long position).
Liquidity risk is also projected to remain well-managed, driven by expectations that banking liquid assets and third-party funds (DPK) will continue to grow. With DPK growth expected to outpace credit disbursement growth, net cash flow in Q1 2026 is projected to increase. Additionally, cash inflow is expected to rise as regional government funds begin to enter the system in Q1 2026.
Expectations for banking performance in Q1 2026 are also at optimistic levels, with the Performance Expectation Index (IEK) at 67. This optimism is driven by expectations of credit growth amid rising credit demand and supported by banks’ efforts to expand credit through available pipelines. The processing industry, as the economic sector dominating banking credit disbursement, recorded growth of 6.60 per cent year-on-year in January 2026 and is projected to remain the primary driver of future credit growth.
Regarding fund raising, respondents forecast that DPK in Q1 2026 will also grow in line with banks’ efforts to secure funding sources to support credit growth and maintain liquidity.
“This survey also shows that respondents have significant attention to global conditions that may persist for a prolonged period or even worsen, and its implications for Indonesia’s economic performance. Although various banking indicators are currently in a resilient position, banking still requires a vibrant business ecosystem to grow well,” Dian stated.