Executive Summary

Key insights and market outlook

The Financial Services Authority (OJK) is pushing for consolidation among KBMI 1 banks following a 6.18% year-on-year decline in their total assets to Rp1,307.87 trillion as of June 2025 ¹

. OJK's Head of Banking Supervision, Dian Ediana Rae, stated that consolidation is necessary to enhance banks' capacity to support national economic growth through better credit distribution and technology investment ¹².

Full Analysis

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Deep Dive Analysis

OJK Pushes for KBMI 1 Bank Consolidation Amid Asset Decline

Asset Decline in KBMI 1 Banks

The Financial Services Authority (OJK) reported that the total assets of KBMI 1 banks, which have a core capital of up to Rp6 trillion, declined by 6.18% year-on-year to Rp1,307.87 trillion as of June 2025 ¹

. This decrease contrasts with the overall banking sector in Indonesia, which saw a 6.43% growth in total assets to Rp12,822.67 trillion during the same period ¹.

Rationale for Consolidation

OJK's Head of Banking Supervision, Dian Ediana Rae, emphasized that consolidation is crucial for enhancing the banking sector's ability to support the national economy ¹

². She noted that Indonesia's economy remains bank-driven, meaning that economic growth is heavily dependent on banks' ability to distribute credit ¹. Larger banks are considered more efficient and better equipped to invest in technology, including digital banking and super apps, which require significant funding ¹.

Current Developments

Dian mentioned that KBMI 1 banks have begun conducting internal assessments regarding potential consolidation strategies, including capital enhancement and mergers with other banks ¹

. The OJK is optimistic that these efforts will lead to a stronger banking structure in the future.

References