Indonesia Banks

Research evidence excerpt

Indonesia Banks

p to 40 years (impacting BTN). Whilst it's likely the

banks will have limited quotas for these products initially, the experience 55% % 38%

with other schemes (village cooperatives, free nutritious meals) suggests 35%

a rapid scaling up as the Government seeks to push higher growth. 15% 6%

• Corporate screen suggests marginally higher system risk, with -5% -4%

individual bank exposures steady. We have refreshed our analysis of all -25% -18% -12%

listed-corporate bank debt (~40% of the sector). The proportion of debt -45% -30% Mandiri BCA BRI BNI BSI BTN

with >5% probability of default (risky) stood at 2.3% in 1Q26, having

troughed in mid-FY25 <1%. Despite a large state-led policy backdrop, Premium (discount) Premium (discount) after free equity

SOE capex is not a material driver with only ~8% of capex in FY25 from

listed SOEs. The state contractor loans (Rp121t) remain impaired and Source: Macquarie Research, May 2026

continue to show up in our screen. Considers share prices vs intrinsic value utilising a

• Market rates - higher onshore 12-month rates following IDR Gordon17.5% CET1Growthas adequate.Model framework.See Fig 6 Freefor details.equity considers

weakness. The market is responding to near-term fiscal pressures with

a higher oil price (Indonesia maintains a fixed price regime on refined

products) and populist spending. In response, Bank Indonesia has lifted

SRBI rates by 1.8ppt off 4Q25 lows; this will impact deposit pricing. The

outlook for NIMs is negative as banks have failed to pass on increases in

prior cycles.

• Sector picks are Mandiri and BCA, and BSI of the smaller lenders.

We upgrade BRI from Underperform to Neutral and BNI from Neutral

to Outperform, on valuation grounds. We reiterate our Underperform

ratings on BTN and Bank Jago.