Indonesian Banking Sector Poised for Stronger Credit Growth in 2026

Positive Outlook from Bankers and Economists

The Indonesian banking sector is expected to experience stronger credit growth in 2026, driven by government incentives and declining interest rates. Citi Indonesia CEO Batara Sianturi noted that these factors will create a more conducive environment for credit demand as interest rates are expected to remain low. "It will be a lower interest rate environment," Sianturi said, highlighting the positive outlook for credit growth.

Economic Forecasts and Projections

Bank Mandiri's Chief Economist, Andry Asmoro, projects that credit growth will reach high single digits, between 9% and 10%, in 2026. This forecast aligns with Bank Indonesia's target range of 8% to 12%. Asmoro emphasized that economic recovery will play a crucial role in driving credit growth, particularly if the government maintains its economic stimulus measures in the first half of 2026.

Bank Indonesia's Role and Policy Support

BI Governor Perry Warjiyo expressed his hopes for higher credit growth during the 2025 PTBI meeting. To achieve this, BI plans to maintain accommodative macroprudential policies throughout 2026. Warjiyo also announced that the central bank will provide macroprudential liquidity incentives to banks that quickly lower their interest rates, further encouraging credit expansion.

Policy Implications and Future Outlook

The combination of government support and BI's accommodative policies is expected to create favorable conditions for credit growth. As interest rates decline and economic activity picks up, banks are likely to see increased demand for loans. The banking sector's ability to respond to this demand will be crucial in achieving the projected growth rates.