Indonesian Banking Sector Faces Continued Credit Growth Challenges

Sluggish Credit Growth Persists

The Indonesian banking sector continued to experience sluggish credit growth in November 2025, with credit expansion reaching 7.74% year-on-year, a slight improvement from the previous month's 7.36% ¹

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Source 2

https://keuangan.kontan.co.id/news/kredit-perbankan-tumbuh-774-per-november-2025

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Source 3

https://finansial.bisnis.com/read/20251217/90/1937594/2025-mau-berakhir-suku-bunga-kredit-bank-baru-turun-24-bps

. Despite this marginal increase, Bank Indonesia (BI) Governor Perry Warjiyo noted that credit demand remains subdued due to businesses adopting a 'wait and see' approach and corporations optimizing their internal financing ¹

Source 1

https://finance.detik.com/moneter/d-8264770/pertumbuhan-kredit-ri-masih-lesu-bos-bi-pelaku-usaha-wait-and-see

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Factors Contributing to Weak Credit Demand

Several factors have been identified as contributing to the weak credit demand:

1. Businesses' cautious stance: The prevailing 'wait and see' attitude among businesses has resulted in delayed investment and expansion decisions ¹
   Source 1

   https://finance.detik.com/moneter/d-8264770/pertumbuhan-kredit-ri-masih-lesu-bos-bi-pelaku-usaha-wait-and-see
   ²
   Source 2

   https://keuangan.kontan.co.id/news/kredit-perbankan-tumbuh-774-per-november-2025
   .
2. Slow decline in lending rates: Despite monetary easing, lending rates have decreased by only 24 basis points from 9.20% at the start of 2025 to 8.96% in November 2025 ³
   Source 3

   https://finansial.bisnis.com/read/20251217/90/1937594/2025-mau-berakhir-suku-bunga-kredit-bank-baru-turun-24-bps
   .
3. Corporate internal financing: Companies are increasingly relying on internal funding sources rather than seeking external credit ¹
   Source 1

   https://finance.detik.com/moneter/d-8264770/pertumbuhan-kredit-ri-masih-lesu-bos-bi-pelaku-usaha-wait-and-see
   .

Undisbursed Loan Facilities Remain Significant

The undisbursed loan facilities, or 'kredit nganggur,' stood at Rp 2,509.4 trillion as of November 2025, representing 23.18% of total available credit ²

. This figure indicates that while credit lines are being approved, they are not being fully utilized by businesses.

BI's Response and Outlook

BI Governor Perry Warjiyo emphasized the need to accelerate the transmission of monetary policy to stimulate credit growth. The central bank is working to ensure that the benefits of lower interest rates are passed on to borrowers more effectively. Despite current challenges, BI remains optimistic about credit growth prospects for 2026 ⁴

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Shariah Banking Performance

In a positive note for the overall banking sector, shariah banking continued to show robust growth. Total assets reached Rp 1,028.18 trillion by October 2025, representing an 11.34% year-on-year growth. Financing disbursed by shariah banks amounted to Rp 685.55 trillion, growing at 7.78% YoY, while third-party funds reached Rp 820.79 trillion, a 14.26% YoY increase ⁵

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Challenges for Specific Banks

Some banks, like Bank of India Indonesia, faced challenges with credit growth and asset quality. The bank's total assets grew by 6.41% YoY to Rp 6.94 trillion, while its non-performing loan ratio edged up to 6.12% from 6.02% in December 2024 ⁶

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