Indonesian Consumer Loan Growth Expected to Slow Amidst Tighter Bank Lending
Indonesia’s consumer loan growth is likely to decelerate in the second half of 2025 as banks become more cautious in this lending segment. According to a July 2025 report by CGS International, based on their direct observations, banks have begun to tighten risk parameters. This includes higher rejection rates for loan applications and increased down payment requirements for auto loans.
Rising Mortgage Rates and Non-Performing Loans
Analysts Handy Noverdanius, Owen Tjandra, and Elizabeth Noviana from CGS International noted that Bank Central Asia (BBCA), a major player in the consumer loan market, has consistently raised mortgage rates over the past few months since the end of fiscal year 2024.
This tightening coincides with a noticeable rise in non-performing loans (NPLs) for system consumer loans, which have been creeping up since 2024. In the first quarter of 2025, consumer loan NPLs reached 2.08%, an increase of 28 basis points (bp) year-on-year and 19 bp year-to-date. Mortgage NPLs, in particular, have seen a sharper increase compared to auto loan NPLs, reaching their highest level since October 2020.
Large banks are also experiencing a similar, though less pronounced, trend in their consumer loan NPLs, with a 22 bp year-on-year and 14 bp year-to-date increase as of Q1 2025. CGS International attributes this partly to soft macroeconomic conditions.
The analysts predict a 6-12 month lag before the full impact of these rising NPLs affects consumer loan growth. As of May 2025, consumer loan growth stood at 1.9% year-to-date and 8.7% year-on-year.
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