JAKARTA — Otoritas Jasa Keuangan (OJK) has reaffirmed that Indonesia’s banking sector remains fundamentally strong, despite global economic uncertainties and recent outlook revisions by international rating agencies.
OJK’s Chief Executive for Banking Supervision, Dian Ediana Rae, stated that the industry continues to demonstrate solid performance and positive growth as of early 2026.
“Overall, Indonesia’s banking sector remains in a strong position, with credit growth reaching 9.96 percent year-on-year in January 2026, in line with third-party funds (DPK) growth of 13.48 percent,” he said.
Dian emphasized that the negative outlook revisions on several major Indonesian banks, including those under the Himpunan Bank Milik Negara (Himbara), by rating agencies such as Moody’s and Fitch Ratings, are not driven by weakening banking fundamentals.
Instead, the revisions are largely influenced by changes in Indonesia’s sovereign credit outlook—from stable to negative—as well as external macroeconomic pressures.
“Generally, institutional ratings in a country are aligned with or lower than the sovereign rating. Therefore, this adjustment is primarily externally driven,” he explained.
From a fundamental perspective, key banking indicators remain robust. The non-performing loan (NPL) ratio stands at a manageable 2.14 percent, while the capital adequacy ratio (CAR) is strong at 25.87 percent.
Liquidity remains ample, with AL/NCD at 121.23 percent, AL/DPK at 27.54 percent, and the Liquidity Coverage Ratio (LCR) at 197.92 percent—well above regulatory thresholds.
Major banks in the KBMI 4 category and Himbara group have recorded double-digit credit growth of 13.34 percent and 13.43 percent, respectively. On the funding side, DPK growth reached 16.32 percent and 16.38 percent, reflecting sustained public confidence.
Capital resilience is also strong, with Himbara’s CAR at 20.32 percent and KBMI 4 banks at 22.33 percent, providing sufficient buffers for future expansion and risk mitigation.
Throughout 2025, major Indonesian banks also posted solid profits, indicating a healthy balance between growth, efficiency, asset quality, and risk management.
Amid global uncertainty, Himbara continues to play a strategic role in supporting real sector financing and government priority programs.
OJK noted that the outlook adjustments by rating agencies do not directly affect banks’ access to funding. Currently, the credit ratings of major Indonesian banks remain at investment grade level.
Moreover, the national banking sector’s funding structure is largely dominated by domestic deposits, limiting reliance on external or international financing.
OJK views the outlook revision as temporary and potentially reversible, depending on improvements in global and domestic economic conditions, particularly in fiscal and external indicators.
“OJK, together with stakeholders, especially members of the Financial System Stability Committee, will continue to safeguard financial system stability through policy coordination and strengthened supervision,” Dian concluded.
With strong fundamentals and ongoing regulatory oversight, Indonesia’s banking sector is expected to remain resilient and continue supporting national economic growth despite global challenges.***
