Indonesia consumer loan growth may slow as banks tighten risk rules

CGS International observed higher rejection rates and mortgage rate increases.

Indonesia’s consumer loan growth may slow down in H2 2025 with banks tightening activity in the segment.

Banks have started to tighten risk parameters, said CGS International in a July 2025 report, citing on-the-ground checks.  Parameters include higher rejection rates and increase down payments for auto loans.

“We have also seen consecutive increases in mortgage rates from [Bank Central Asia (BBCA)], the market leader in consumer loans, over the past few months since end-FY2024,” wrote CGS International analysts Handy Noverdanius, Owen Tjandra, and Elizabeth Noviana.

Non-performing loans (NPLs) for system consumer loans have crept up since 2024, with the Q1 2025 figure at 2.08%. This is 28 basis points (bp) higher than in Q1 2024, and 19 bp higher year-to-date (YTD), the analysts said.

Mortgage NPLs in particular logged a sharper uptick compared to auto loan NPLs, it said. Mortgage NPLs has reached its highest level since October 2020.

“Amongst the large banks, we also noted a similar NPL trend (though at a lower magnitude) in the consumer segment, with an increase of 22bp year-on-year (YoY) and 14bp YTD as of Q1 2025. We believe this was partially driven by the soft macroeconomic conditions,” CGS International said.

The analysts estimate a 6-12 month lag in the impact on consumer NPLs increasing and consumer loan segments’ growth.

Consumer loans growth was 1.9% YTD and 8.7% YoY as of May 2025.