Indonesia’s Eximbank to maintain ‘robust’ capitalisation

But its high stock of problem loans will continue to weigh on its net interest margin.

Lembaga Pembiayaan Ekspor Indonesia (Eximbank) is expected to maintain a ‘robust’ capitalization, according to Moody’s Ratings.

Capitalisation increased to 32.9% as of March 2025 from 15.1% the previous year, following an IDR5t capital infusion from the government.

“We expect the bank’s capitalisation to remain robust at the current level in the next 12-18 months, as the bank’s weak internal capital generation is balanced by its shrinking balance sheet,” the ratings agency said.

Profitability has recovered in 2024, with return on average assets rising to 0.4% after a large loss of -24.6T in 2023.

Credit costs have been reduced to 0.5% in 2024 from 23% in 2023.

The bank’s net interest margin (NIM) is expected to remain modest, with yields constrained by weak loan growth and a still-high stock of problem loans. Mild NIM upside is expected once the bank has successfully grown its share of performing loans whilst reducing its stock of problem and restructured loans.

“As such, we expect the bank's return on assets to remain weak over the next 12-18 months, as it continues to charge high loan-loss provisions as part of its aggressive problem loan write-off strategy,” Moody’s said.

Eximbank's liquidity buffers are ‘thin’ with cash and government securities holdings covering only 14.8% of debt maturing in the 12 months from March 2025, the ratings agency said.

“Whilst the bank remains susceptible to external market conditions due to its reliance on wholesale funding, refinancing risks are somewhat mitigated by its quasi-sovereign status and strong access to short-term bank funding,” it said.