Indonesian banks gain funding relief as deposits rise 16%

SOE banks recorded stronger loan growth compared to their peers.

Indonesia’s banking system liquidity is expected to improve throughout 2026, which should help contain funding costs and limit further margin compression, according to Nomura Securities Malaysia Sdn Bhd.

The system saw “firmer” deposits growth and continued money supply (M2) expansion, up 10.6% year-on-year (YoY) in December 2025, alleviating liquidity tightness.

Stronger-than-expected fiscal spending to stimulate growth, increased fund placements by Indonesia’s Ministry of Finance, and dividend proceeds channelled by Danantara into state-owned enterprise (SOE) banks are contributing to deposits and money supply growth.

Deposits grew 16% YoY at the system level, whilst system loan growth is healthy at 13% YoY.

SOE banks— Bank Negara Indonesia (BNI), Bank Mandiri, Bank Syariah Indonesia (BRIS), and Bank Rakyat Indonesia (BRI)— recorded stronger loan growth expansion of between 12% to 19% YoY compared to their peers. Nomura Securities attributed this to divergence primarily to greater participation by SOE banks in the government’s Agrinas program, a food security and agriculture-related initiative.