Indonesia banks face tight liquidity through 2026: CreditSights

Higher energy prices will reduce room for fiscal spending, the report said.

The Indonesian banking system’s liquidity is expected to stay challenged throughout 2026 and funding costs to be elevated as rupiah and rates remain under pressure, said CreditSights, a Fitch Solutions Service.

Higher energy prices will narrow fiscal buffers and reduce the room for fiscal spending to aid liquidity and growth,  CreditSights wrote in a research report published 29 April.

“[We] also see moderating loan demand and higher credit costs as the Middle East conflict filters through to growth,” it said, adding that credit costs will trend higher and even exceed Indonesian banks’ guidance.

Bank Mandiri and Bank Negara Indonesia (BNI) logged ‘resilient’ Q1 2026 profits, with Bank Mandiri’s net profit rising 16.6% year-on-year (YoY) whilst BNI’s rose by 5.2% YoY.

Loan books also expanded, although margin pressure remains the core theme amidst tight system liquidity and elevated funding costs, CreditSights said.

Bank Mandiri has revised down its net interest margin (NIM) guidance by 10 basis points to 4.5% to 4.75%, whilst BNI retained its 3.5% to 3.8% NIM guidance.

“Asset quality showed a slight deterioration this quarter at both banks, and mass retail [or] small business segments remained soft; provision buffers also continued to be drawn upon but remained high,” CreditSights said.

Indonesian banks should be able to absorb the headwinds, according to CreditSights.