Executive Summary

Key insights and market outlook

Indonesian banks are facing challenges in achieving credit growth and profit targets in 2025. Credit growth slowed to 7.36% as of October 2025, far from double-digit expectations ²

. Working capital loans showed particularly weak performance, growing only 2.1% year-on-year to Rp 3,448.2 trillion. High interest rates are cited as a major factor restraining credit demand. Only a few major banks like Bank Mandiri and Bank Syariah Indonesia managed to achieve double-digit growth.

Full Analysis

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Deep Dive Analysis

Indonesian Banking Sector Faces Challenges in 2025

Slowing Credit Growth

The Indonesian banking sector is experiencing a slowdown in credit growth as of October 2025, with overall credit growth reaching only 7.36% annually ²

. This performance falls short of the double-digit growth that was initially anticipated. The working capital loan segment is particularly affected, showing a sluggish growth of 2.1% year-on-year to Rp 3,448.2 trillion as of October 2025 ¹.

Factors Contributing to Slowdown

Several factors are contributing to this slowdown. High credit interest rates remain a significant deterrent for businesses looking to take on new financing ¹

. The cautious approach by businesses in expanding their operations due to economic uncertainty has also played a role. Moch Amin Nurdin, Advisor at Banking & Finance Development Center, highlighted that the current high interest rate environment is making companies more cautious about adding new debt ¹.

Performance of Major Banks

Among the top ten banks, only Bank Mandiri and Bank Syariah Indonesia (BSI) were able to achieve double-digit financing growth, at 11.08% and 13.01% respectively ²

. This indicates that larger banks with stronger capital positions are better equipped to navigate the challenging environment.

Implications for Banking Sector

The slowdown in credit growth and profitability poses significant challenges for Indonesian banks in achieving their annual targets. Banks are now focusing on strategic initiatives to stimulate demand and improve their lending activities. The current market conditions suggest that banks will need to adapt their strategies to maintain growth momentum in the remaining months of 2025.

References