Indonesia’s banking sector posted a 7.03% year-on-year credit growth in July 2025, signaling a mild deceleration from the previous month’s 7.77%. Despite the slowdown, the Financial Services Authority (OJK) affirmed that banking intermediation remains stable. Strong liquidity and capital buffers continue to support financial system resilience amid global uncertainty.
Key Facts & Background: As of July 2025, total banking credit reached Rp8,043.2 trillion. Investment credit led growth at 12.42% yoy, followed by consumption credit (8.11%) and working capital loans (3.08%). Foreign bank branches recorded the highest ownership-based growth at 9.90%. Corporate loans rose 9.59%, while MSME credit grew modestly at 1.82%. Credit expansion was strongest in mining (18.31%), transport and warehousing (22.25%), and other services (28.92%). Third-party funds (DPK) grew 7.00% yoy to Rp9,294 trillion. Liquidity indicators—AL/NCD at 119.43%, AL/DPK at 27.08%, and LCR at 205.26%—remained well above regulatory thresholds.
Strategic Insights: The deceleration in credit growth reflects cautious optimism amid shifting monetary conditions and sectoral rebalancing. Investment-led lending suggests confidence in long-term capital formation, while subdued MSME credit highlights ongoing recovery challenges. The banking sector’s robust capital adequacy (CAR at 25.88%) and low non-performing loan ratios (NPL gross at 2.28%) underscore its resilience. Declining interest rates—driven by BI-Rate cuts—may stimulate future lending, but structural reforms are needed to deepen financial inclusion, especially for MSMEs. As Indonesia navigates post-pandemic normalization, maintaining balanced credit expansion and sectoral diversification will be key to sustaining economic momentum.