Another disparity exists between banks' strong loan expansion and their weak increase in interest revenue.
Indonesian banks The stability of its profits is concealing an expanding disparity in loans, according to UOB Kay Hian.
UOBKH analyst Posmarito Pakpahan noted that loan expansion is now mainly fueled by big companies and state-owned enterprises (SOEs), while demand from individuals and micro, small, and medium-sized businesses stays weak.
Although overall loan growth stands at 24.5% year-over-year (YoY) and 20.6% YoY at Bank Negara Indonesia According to UOBKH, with BNI and Bank Mandiri as the respective leaders, the overall growth for MSME and household loans across the industry stands at only 0.6% year-on-year and 3.4% year-on-year, respectively.
Robust revenue from fees, strict management of expenses, and favorable provisions contributed to strong profits for major banks during the second quarter of 2026, according to Pakpahan, following discussions between UOBKH and Bank Central Asia (BCA), Bank Mandiri, and Bank Rakyat Indonesia (BRI).
The discussions revealed ongoing weaknesses in borrowing requests beyond the corporate sector, as well as rising funding cost pressures .
Another growing disparity exists between loan expansion and interest revenue within major banking institutions. For instance, Bank Mandiri experienced a loan increase of 20.6% during the second quarter, whereas its interest income only rose by 5.8%. Similarly, BNI showed a contrast between 24.5% in loans and 15.6% in interest earnings, as did BRI with 11% in lending versus a mere 0.1% in interest income.
Banks face fund cost pressures In the latter part of 2026, Pakpahan stated, as financing conditions deteriorated.
"Although [Q2 2026] profits are likely to stay strong, we anticipate the effects of reduced liquidity and increased financing expenses will start to be more noticeable from [H2 2026] onwards," Pakpahan stated.