In brief
Indonesia’s banking sector continues to evolve amid consolidation, regulatory reform, and shifting macroeconomic conditions. While the pace of consolidation has moderated, the number of commercial and rural banks has continued to decline in line with regulator’s efforts to strengthen industry resilience. Foreign investors remain an important driver of M&A activity, supported by Indonesia’s large population and attractive profitability, with significant headroom for further participation.
At the same time, banks are navigating a more challenging operating environment. Although the sector closed 2024 with strong capital buffers and double-digit loan growth, the outlook for 2025–2026 is shaped by slower economic momentum, global trade uncertainty and domestic socioeconomic pressures. These factors are expected to weigh on credit growth, asset quality, and liquidity, even as policymakers maintain a broadly constructive medium-term growth outlook.
Looking ahead, Indonesia’s banking industry is pursuing ambitious growth targets under the government’s 2025–2029 development plan. Key themes include the new bank classification framework, the rise and maturation of digital banks, the rapid adoption of QRIS, and renewed efforts to develop a more competitive Sharia banking ecosystem. This publication provides a concise overview of these developments and their implications for the future of Indonesia’s banking sector.
