Banking – Jul25 loan growth 7.03% yoy

Banking – Jul25 loan growth 7.03% yoy Indonesia's bank credit growth slowed to its lowest point since March 2022, reaching only 7.03% yoy in July 2025. This falls short of Bank Indonesia's (BI) target of 8% to 11%. According to BI Governor Perry Warjiyo, banks are hesitant to lend, preferring to invest their surplus cash in securities. This is despite having ample liquidity, supported by a 7% increase in Third Party Funds. While investment credit saw strong growth at 12.42%, demand for consumer credit and working capital credit was weak, growing at 8.11% and 3.08% respectively. This indicates businesses are relying on internal funding rather than seeking loans. BI plans to implement loose macroprudential policies and collaborate with the Financial System Stability Committee to encourage banks to increase lending and support economic growth. (Source : Kontan). Comment : The analysis reveals a complex situation where bank credit growth is hampered by a combination of supply-side caution from banks and a demand-side weakness from businesses. While banks have sufficient liquidity (supported by a 7% increase in Third Party Funds), they are reluctant to lend, and many businesses are reluctant to borrow. The strong growth in investment credit, driven by specific export-oriented sectors, provides a glimmer of hope. However, for a broad-based economic recovery, BI's planned policy interventions, including loose macroprudential policies and rate cuts, will need to be effectively transmitted to the real economy to encourage both supply and demand for credit. Maintain OW for the secor with stock pecking order BBCA > BRIS > BMRI.