The Indonesian banking sector is expected to maintain solid performance until the end of 2025, according to the OJK Business Orientation Survey (SBPO) for Q4 2025 (22/11). The survey, conducted in October 2025, involved 102 banks representing 99.25% of the total assets of all commercial banks as of September 2025.

The Business Orientation Index (IBP) for Q4 2025 reached 66, indicating optimism among respondents. OJK Banking Supervisor Dian Ediana Rae explained, “The main reason respondents believe banking performance will remain solid is the expected improvement in domestic macroeconomic conditions, supported by confidence that banks can adequately manage their risks.”

Positive Macroeconomic Expectations Drive Banking Confidence

The Macro-Economic Expectation Index (IKM) returned to an optimistic level of 63 in Q4 2025. This is driven by expected growth in the domestic economy, supported by lower BI Rates and a stronger Rupiah.

Consumer spending during the Christmas and New Year holidays is expected to boost demand for goods and services. Government stimulus programs, such as the 8+4+5 scheme, are also anticipated to increase purchasing power. At the same time, inflation is projected to rise due to higher economic activity and consumption.

Banking Risks Remain Controlled Amid Year-End Activity

Most respondents believe banking risks remain manageable in Q4 2025. The Risk Perception Index (IPR) reached 57, reflecting controlled risks. Credit quality remains sound, and Net Foreign Exchange Position (PDN) is low, with banks holding more foreign assets than liabilities.

Banks expect net cash flow to decrease compared to the previous quarter. However, cash outflows may rise due to increased withdrawals for operational needs and year-end local government expenditures.

Credit and Deposit Growth Support Optimism

The Expectation of Banking Performance Index (IEK) reached 78, showing optimism for Q4 2025. Credit growth is expected to continue as banks respond to increasing demand and actively expand credit in available pipelines.

Key sectors driving credit growth include manufacturing, which grew 8.64% year-on-year in September 2025, mining and excavation (19.15% yoy), and transportation and warehousing (19.32% yoy). Respondents also project that third-party fund (DPK) collection will increase, supporting liquidity and credit expansion.

Banks Confident in Achieving Year-End Targets

The SBPO also asked banks about their projections for achieving 2025 Rencana Bisnis Bank (RBB) targets. Most banks remain optimistic that both credit and DPK targets can be met in the current economic conditions.

OJK conducts the SBPO quarterly to capture the banking sector’s view on economic trends, risk perceptions, and business orientation. Historically, the survey has been relatively accurate in predicting key macroeconomic and banking indicators in Indonesia.

PHOTO: FREEPIK

This article was created with AI assistance.