Indonesian Islamic Banks Face Rising Non-Performing Financing

Increase in NPF Ratio

Several Indonesian Islamic banks have experienced a rise in non-performing financing (NPF) during the first nine months of 2025. According to data from the Financial Services Authority (OJK), the NPF ratio for Islamic Commercial Banks (BUS) stood at 2.19% as of June 2025, marking an increase from 2.04% in the same period last year and 2.15% in January 2025.

NPF Trend Across Islamic Banking Units

The trend of increasing NPF is not limited to BUS alone. The NPF ratio for Sharia Business Units (UUS) also showed a similar upward trend, reaching 2.35% as of June 2025, up from 2.17% in the same period the previous year and 2.29% in January 2025. This indicates a broader challenge within the Islamic banking sector.

Specific Bank Performance

Among the affected banks is PT Bank Muamalat, which saw its NPF ratio rise significantly from 2.95% in September 2024 to 4.26% in September 2025. This increase highlights the growing credit risk faced by some of the Islamic banks in Indonesia.

Implications for the Islamic Banking Sector

The rising NPF ratios across Islamic banks and UUS suggest potential challenges in credit risk management and economic conditions affecting borrowers' ability to repay. This trend warrants closer examination by regulators and market participants to maintain financial stability in the Islamic banking sector.