Indonesia's Financial Services Authority survey sets Q1 2026 Banking Business Orientation Index at 56 as outlook stays optimistic

Indonesia's Financial Services Authority published its Q1 2026 Banking Business Orientation Survey, indicating banks expect performance to remain solid with risks viewed as manageable despite heightened global uncertainty. The Banking Business Orientation Index (IBP) stood at 56, remaining in the optimistic zone. The survey was conducted in January 2026 with 93 respondent banks representing 94.17% of commercial bank assets (December 2025 data). While the Macroeconomic Condition Expectation Index (IKM) fell to 45 (pessimistic zone) on expectations of exchange-rate weakening and higher inflation, risk perceptions remained positive with the Risk Perception Index (IPR) at 57, supported by expectations that credit quality will be maintained and net open foreign exchange positions remain low. Liquidity risk was also expected to stay contained as liquid assets and deposits (third-party funds) are projected to grow, with deposit growth outpacing loan growth and net cashflow expected to increase, including from anticipated inflows of local government funds. Performance expectations were stronger, with the Performance Expectation Index (IEK) at 67 on projected credit growth from higher demand and banks’ loan pipelines; manufacturing credit grew 6.60% year on year in January 2026 and was projected to remain a key driver. The release also notes respondents’ concerns about a potentially prolonged deterioration in global conditions, citing rising geopolitical tensions and market volatility, while most respondent banks remained optimistic that micro, small and medium enterprise lending will grow with a larger share of total credit.