Indonesian banks face limited hit from rising bond yields

Bank Mandiri and BNI may be more "responsive" to yield movements, the report said.

Indonesian banks should see minimal impact from government bond yields, according to UOB Kay Hian (UOBKH).

Moody’s and Fitch recently flagged growing investor concerns over Indonesia’s fiscal trajectory and policy credibility, the brokerage firm noted in a sector report published on 13 March 2026. This is reportedly already reflected in market pricing of 10-year government bonds, which is trading over 190 basis points (bp) above the Bank Indonesia (BI) rate.

“Our economist expects that the 10-year bond yield to rise above 7% as fiscal pressure persists,” said UOBKH analyst Posmarito Pakpahan.

Using bond yield as a proxy, the direct and immediate earnings impact of rising yields on the Big Four banks is limited, given government bond holdings represent a relatively small proportion of total earning assets compared with loans, Pakpahan said.

Bank Mandiri is at the low end at 10.8%, whilst Bank Central Asia is at the high end at 13.7%.

Of the Big 4 banks, Bank Negara Indonesia (BNI) and Bank Mandiri carry relatively higher proportions of fair value through other comprehensive income and trading book bonds compared to peers, UOBKH said.

This makes them more “responsive” to yield movements.

A second order risk to banks are pressures on the Rupiah, and the BI possibly tightening policy.