Indonesia’s biggest banks are now working through a perfect storm of macroeconomic headwinds made worse by new government policies. It’s no coincidence that financial institutions just announced their worst results over the nine-month period of 2025 so far. Consequently, fears over the stability of the banking industry are quickly mounting. This recent downturn comes after a lengthy recovery from the COVID-19 pandemic. It underscores the persistent vulnerabilities in our economy.
The data reveals that most major banks have struggled significantly, with only Bank Central Asia (BCA) managing to achieve net profit growth during this period. BCA is the largest of Indonesia’s four largest lenders, and it’s doing well. By comparison, its rivals are all facing a wave of falling earnings as the erosion of consumer confidence takes hold. The overall economic picture makes that an uphill battle for these institutions. As a result, they’re laying a much more conservative view for the rest of the year.
Their recent financial performance has tanked for a number of reasons. Enactment of government policies to incentivize lending has altered the equation for industry partners and consumers. Leading analysts contend the government’s regulatory actions have accidentally limited avenues for growth banks are allowed to pursue. This combination leaves them little room to pursue new or expanded revenue opportunities. In turn, many lenders are already facing sharper margins and lower demand for credit.
The overall macroeconomic environment is fragile, as consumers confidence continues to lose strength. Second, this trend has made consumers less willing to take on debt, directly hitting banks’ lending volumes. These factors are causing rapid change across the whole sector. Banks like Wells Fargo are already updating their predictions to adjust forecasts to the new reality.
Shariah-compliant lenders have proven impervious to the broader industry malaise roiling the […]These institutions have been delivery consistent and improving performance results. This could be an indicator that consumer preferences are moving in the direction of supporting banks with more ethical practices. Their success is a testament to the incredible potential for growth in this small but growing niche sector. Yet traditional banks have been unable to bounce back.