TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search results
Popular Reads
Top Results
No results found. Please check your search term and try again
Can't find what you're looking for?
View all search resultsRising interest rates take toll on bank margins
Rising interest rates are driving up funding costs and squeezing net interest margins (NIM) of banks, with analysts saying lenders will need to step up operational efficiency to sustain profitability.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
High-rise buildings are illuminated by the sunset on Aug. 2, 2024, in the Sudirman Central Business District (SCBD) in South Jakarta. (Reuters/Ajeng Dinar Ulfiana)
R
ising interest rates are driving up funding costs and squeezing the net interest margin (NIM) of banks, with analysts saying lenders will need to step up operational efficiency to sustain profitability.
Banks’ interest margins narrowed to an average of 4.34 percent in June, down from 4.36 percent in May and 4.48 percent in June 2025, Financial Services Authority (OJK) data show.
Analysts attribute the decline to the fact that funding costs have risen faster than interest earnings.
In May, Bank Indonesia (BI) raised its benchmark rate for the first time in months to defend a weakening rupiah, lifting it by 50 basis points (bps) to 5.25 percent. The central bank subsequently announced more rate hikes in June, bringing the BI Rate to its current level of 5.75 percent.
The increase has weighed on domestic banks like the country’s largest private lender, BCA, as well as state-owned Band Mandiri and Bank Tabungan Negara (BTN), all of which posted lower NIMs in their recent financial reports.
Read also: Banks expected to see lower profits amid weakening rupiah, rate hikes
BCA saw its interest margin decline to 5.3 percent in June from 5.8 percent a year earlier.
