Indonesian Banking Sector Faces Continued Margin Pressure

Declining Net Interest Margin Trends

The Indonesian banking sector is expected to maintain its current margin pressure trend through early 2026. According to data from the Financial Services Authority (OJK), the banking sector's Net Interest Margin (NIM) decreased to 4.57% by October 2025, down from 4.62% in December 2024 and 4.61% in October 2024. This decline indicates ongoing challenges in maintaining interest margins despite efforts to stabilize the financial sector.

Major Banks Show Similar Declines

Major Indonesian banks have experienced similar NIM declines. For instance, Bank Mandiri's NIM for November 2025 stood at 4.3%, down from 4.6% in October 2025. For the period January to November 2025, Bank Mandiri's NIM was recorded at 4.5%, remaining below the management's target range of 4.8% to 5% for 2025.

BNI's Profit Decline

PT Bank Negara Indonesia Tbk (BNI) also reported a decline in profit, with its bank-only profit decreasing by 6% year-over-year to Rp 18.62 trillion by November 2025. The previous year's profit for the same period was Rp 19.8 trillion. This decline was primarily attributed to a decrease in net interest income, which dropped by approximately Rp 178 billion to Rp 35.4 trillion.

Implications for the Banking Sector

The continued pressure on NIM and declining profits among major banks suggest that the Indonesian banking sector faces significant challenges in the near term. These trends indicate potential areas of focus for regulators and bank management to address margin pressures and stabilize financial performance.