Indonesian Banks Respond to 'Lazy Bank' Criticism Amid Credit Growth Concerns

Banks Defend Lending Practices

Major Indonesian banks have pushed back against criticism of being overly cautious in their lending practices, with BCA reporting that its loan portfolio reached Rp921 trillion by November 2025, representing healthy growth. The bank's management emphasized their commitment to maintaining a prudent approach while still supporting credit growth.

Key Financial Metrics

BCA's financial metrics demonstrate a strong position: the bank maintained a loan-to-deposit ratio (LDR) of 75.6% in the first nine months of 2025, slightly higher than the previous year's 75.1%. More importantly, the bank's capital adequacy ratio (CAR) stood at 29.9%, indicating a solid capital position that can support future growth while managing potential risks.

Industry Perspective on Liquidity and Credit Growth

Allo Bank's Director of Risk, Compliance, and Legal, Ganda Raharja Rusli, provided additional context on the banking industry's liquidity position. According to Ganda, the current liquidity in the banking sector is relatively more relaxed compared to the end of the previous year, with most banks maintaining LDRs below 90%. This liquidity has been supported by the government's placement of approximately Rp200 trillion in state-owned banks.

Factors Influencing Credit Growth

Despite the favorable liquidity conditions, credit growth has been constrained by both supply and demand factors. Ganda noted that banks are being cautious due to economic uncertainty, while businesses are also hesitant to expand amid policy uncertainty. The non-performing loan (NPL) ratio remains under 3%, indicating that banks are managing their risk effectively.

Expert Analysis on Structural Issues

Economic analyst Bhima Yudhistira from Celios offered a more critical perspective, suggesting that the phenomenon of 'lazy banks' is a structural issue rather than a simple liquidity problem. Bhima argued that banks' preference for investing in government securities (SBN) rather than lending to businesses is driven by both the attractive yields and increasing business risk.

Policy and Business Confidence

The analyst also highlighted that low business confidence stemming from fiscal policy uncertainty is contributing to the slow credit growth. Businesses remain cautious about expanding their operations due to concerns about the effectiveness of government spending programs and overall policy direction. Bhima suggested that the recent injection of liquidity into the banking system may not address the root causes of the issue.

Looking Ahead to 2026

For 2026, banks are expected to maintain their selective approach to lending, with a continued focus on retail and trade sectors that have proven resilient. The industry is likely to see a cautious expansion of credit, balanced against the need for maintaining asset quality. As Bhima noted, addressing the structural issues will require more comprehensive policy measures beyond just providing liquidity.