Indonesian Banking Sector Faces Liquidity-Credit Disparity

Strong Liquidity Growth

The Indonesian banking sector has seen significant liquidity growth, with third-party funds (DPK) increasing by 12% year-on-year as of November 2025, outpacing credit growth which reached 7.74% YoY ¹

. This disparity has led to a gradual decline in the loan-to-deposit ratio (LDR) to 84% in November 2025 from 88% in December 2024 ¹

Source 1

https://investasi.kontan.co.id/news/begini-rekomendasi-saham-bank-saat-tren-likuiditas-makin-kencang

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Challenges in Credit Disbursement

Despite the liquidity, credit disbursement remains sluggish. Bank Indonesia's monetary easing measures, including a 125 basis point rate cut throughout 2025 and macroprudential policy relaxations, have not effectively translated into increased lending ³

. The main constraints identified are:

1. Weak demand: Corporations and SMEs remain cautious in expanding operations due to global uncertainties and internal funding availability ³
   Source 3

   https://finansial.bisnis.com/read/20251223/90/1938966/transmisi-pelonggaran-bi-ke-kredit-masih-tertahan-kb-bank-dan-neobank-ungkap-faktor-permintaan-dan-risiko
   ⁴
   Source 4

   https://finansial.bisnis.com/read/20251223/90/1938994/biang-keladi-di-balik-seretnya-penyaluran-kredit-bank
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2. High funding costs: Despite declining policy rates, banks' cost of funds remains elevated due to sticky deposit rates and increased risk premiums ⁴
   Source 4

   https://finansial.bisnis.com/read/20251223/90/1938994/biang-keladi-di-balik-seretnya-penyaluran-kredit-bank
   .
3. Risk aversion: Banks are maintaining prudent lending practices, particularly in segments like SMEs and consumer loans ³
   Source 3

   https://finansial.bisnis.com/read/20251223/90/1938966/transmisi-pelonggaran-bi-ke-kredit-masih-tertahan-kb-bank-dan-neobank-ungkap-faktor-permintaan-dan-risiko
   .

Sector Outlook

Analysts from Maybank Sekuritas Indonesia recommend purchasing bank stocks, particularly BBRI, BBCA, BRIS, BMRI, and BBNI, anticipating gradual credit recovery as interest rates decline and government spending increases ¹

. However, the transmission of monetary policy to credit growth remains challenging. Effective credit growth is expected to materialize only with stronger domestic demand recovery and improved business climate ⁴

Source 4

https://finansial.bisnis.com/read/20251223/90/1938994/biang-keladi-di-balik-seretnya-penyaluran-kredit-bank

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