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View all search resultsBanks remain under margin pressure in third quarter
Major Indonesian banks have seen their interest margins continue to decline in the third quarter of this year, putting pressure on profitability amid high benchmark rates and intensifying competition for both borrowers and deposits.
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High-rise buildings are pictured in Jakarta’s business district on Nov. 4, 2025. (REUTERS/Willy Kurniawan)
M
ajor Indonesian banks have seen their interest margins continue to decline in the third quarter of this year, putting pressure on profitability amid high benchmark rates and intensifying competition for both borrowers and deposits.
Industry analysts expect the pressure to persist through the end of the year, as Bank Indonesia (BI) may keep interest rates high to defend the rupiah, which was hovering not far above its all-time low against the United States dollar on Thursday.
The average net interest margin (NIM), a key profitability indicator that measures the difference between lending rates that banks charge and deposit rates paid to customers, began to deteriorate since BI raised its policy rate by a cumulative 100 basis points (bps) in May and June.
According to Financial Services Authority (OJK) data, banks’ NIM narrowed to an average of 4.31 percent in August.
Read also: Rising interest rates take toll on bank margins
As of September, NIMs at state-owned lenders Bank Mandiri and Bank Negara Indonesia (BNI) extended their quarterly decline, while private lender Bank Central Asia (BCA) posted a slight quarterly increase, despite a year-on-year (yoy) decline.
Mandiri’s consolidated NIM fell to 4.43 percent in the third quarter from 4.56 percent in the previous quarter and 4.89 percent in last year’s third quarter, with the bank’s funding costs increasing by 30 bps to 2.34 percent due to higher time deposit costs.
