Banking - Idle loans at banks increase, here are the reasons

Banking - Idle loans at banks increase, here are the reasons The expansion of the business world is increasingly sluggish. Not to mention boosting credit growth, many corporations haven't even utilized the credit facilities they have. This is reflected in the records of undisbursed loans held by several banks, where the value of these undisbursed loans is actually increasing. The growth of idle credit is also experienced by Bank Mandiri (BMRI). This bank, with its golden ribbon logo, had idle credit reaching IDR262.8 tn as of May 2025, an increase of 7.97% yoy. Nevertheless, the record has started to decline compared to the end of 2024. In December 2024, Bank Mandiri's idle credit amounted to IDR267.3 tn. On the other hand, there are also banks that are able to reduce their non-performing loans. One of them is Bank CIMB Niaga (BNGA), which recorded non-performing loans worth IDR109.3 tn as of May 2025. This value slightly decreased from the same period the previous year, which was IDR109.9 tn. (Source : Kontan) Comment : The increasing idle credit in Indonesian banks is a clear symptom of a cautious business environment, driven by global geopolitical tensions, US tariff uncertainty, and general economic sluggishness. While banks are adopting selective lending strategies to manage risk and protect capital, the challenge remains to stimulate corporate demand for credit. The outlook for credit disbursement in the second half of 2025 hinges significantly on the acceleration of government spending and programs, which are hoped to inject confidence and incentivize new investments by corporations. The varied performance among banks, with CIMB Niaga managing to reduce NPLs, indicates that proactive risk management and selective strategies can yield positive results even in a challenging environment.