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Savings crunch may stall banks' loans growth in 2025
With loan-to-deposit ratios (LDR) of 98 percent and 96.1 percent, respectively, Bank Mandiri and BNI exceeded the OJK’s recommended range of 78 to 92 percent last year.
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A bank clerk counts rupiah bills at a Bank Mandiri branch in Jakarta. (JP/Nurhayati)
I
ndonesian banks might be unable to maintain fast loan growth this year because their customers’ savings have not kept pace, which impacts financing for businesses and individuals.
Analysts believe local lenders need to tweak their strategies for 2025 by slowing down loan growth to keep liquidity within healthy bounds.
In its 2024 financial report, state-owned lender Bank Mandiri posted an impressive 20.7 percent loan growth, double the industry’s average loan growth at 10.4 percent. However, deposit growth lagged significantly at just 6.8 percent, pushing the bank's loan-to-deposit ratio (LDR) up from 86.8 percent in 2023 to a concerning 98 percent at the end of last year.
The LDR, a key measure of liquidity, signals risks when it climbs too high. A high LDR suggests that a bank may lack the liquidity to handle unforeseen funding needs or take advantage of opportunities to issue more loans. The Financial Services Authority (OJK) recommends an LDR in the range of 78 to 92 percent for local banks.
Similarly, fellow state-owned lender BNI recorded an increase in its LDR from 85.8 percent to 96.1 percent last year, still well above the OJK’s recommended upper limit, as its third-party funds dropped by 1.2 percent while loan disbursement grew 10.7 percent.
Even the country’s largest private lender, BCA, known for maintaining a relatively low LDR, experienced an increase in the ratio from 70.2 percent to 78.4 percent.
Andry Asmoro, chief economist at Bank Mandiri, highlighted that local lenders had capitalized on opportunities to achieve some of their strongest loan growth rates in six years.
