Pawnshops Maintain Optimism on 2026 Margins Amid BI Rate Cuts

Positive Outlook on Financing Margins

Indonesian pawnshops are maintaining their optimistic outlook for financing margins in 2026, despite the potential for further reductions in Bank Indonesia's benchmark interest rate. PT Pegadaian's Director of Finance and Strategic Planning, Ferdian Timur, stated that continued rate cuts could lead to a gradual decrease in funding costs ¹

Impact of Lower Interest Rates

The reduction in BI rate is expected to positively impact pawnshops by lowering their cost of fund, which is primarily influenced by bank loans and bond issuance. Ferdian explained that while the decrease in funding costs could enhance financing margins, the impact might not directly correlate with the magnitude of the rate cuts due to varying interest rates offered by different banks ¹

Industry Perspectives

PT Gadai ValueMax Indonesia shared a similar view, with Manager Accounting Panji Parang Kunang noting that financing margins are heavily influenced by the benchmark interest rate and funding cost structure. The company believes that as long as the reduction in funding costs is not entirely passed on to customers through lower pawnshop interest rates, margins can be maintained at moderate levels ²

Current Market Conditions

As of late 2025, Bank Indonesia maintained its BI rate at 4.75%. The potential for rate cuts in the future continues to be a significant factor for the pawnshop industry's financial performance in 2026 ²