Banks - Indonesia: The worst may be behind us, but liquidity remains the key watchpoint

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Banks - Indonesia: The worst may be behind us, but liquidity remains the key watchpoint

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Banks - Indonesia

The worst may be behind us, but liquidity

remains the key watchpoint

Industry Overview

Growth benign but early signs the worst may be behind 01 July 2026

System loan growth remains relatively soft, although momentum is gradually improving Equity

(+1.0% MoM in Apr and preliminary +1.7% MoM in May). At the same time, liquidity ASEAN | Indonesia

remains a key area of focus, with elevated LDRs, CASA outflows and higher SRBI yields Banks

continuing to pressure funding costs, particularly for banks relying on term deposits. We Sukriti Bansal >>

remain watchful of liquidity tightening risks, especially in periods of rupiah weakness. Research Analyst

Merrill Lynch (Singapore)

That said, there are increasing signs that downside risks are becoming manageable. +65 6678 0454 sukriti.bansal@bofa.com

Indonesia continued to post a modest trade surplus despite higher oil prices, which have Aiden Chionh >>

recently begun to correct, while policymakers appear increasingly sensitive to domestic Research Analyst

liquidity conditions. Recent indications that the MoF could redeploy excess cash back Merrill+65 6678Lynch5539(Singapore)

into the banking system should provide some support to liquidity, while BI has signaled a aiden.chionh2@bofa.com

more calibrated tightening path from here rather than mechanically matching further

Fed hikes. While investor interest remains subdued amid the MSCI review overhang

through November, we stay cautiously and selectively constructive on the sector outlook. Exhibit 1: PO summary

Buy BBCA, BMRI, BBNI

We maintain Buy on BBCA, BMRI and BBNI. BMRI and BBNI offer greater leverage to a