Bank Indonesia Governor Perry Warjiyo highlighted the banking industry during the latest Board of Governors Meeting (RDG) held on August 20, 2025.

He reported that in July 2025, bank lending rates stood at 9.16%, remaining relatively unchanged from the previous month. “Bank Indonesia believes that lending rates need to continue to decline to support credit growth and financing, thereby driving the economy to a higher level,” Perry stated during a press conference on the August 2025 RDG results, Monday (August 25, 2025).

Perry further noted that the yield on two-year government securities (SBN) fell from 5.86% to 5.54%, while the ten-year yield declined from 6.56% to 6.4%. Deposit rates also edged down from 4.85% to 4.75%.

However, new lending rates increased by 17 basis points (bps) to 9.79%. This rise was driven by higher rates among national private commercial banks (BUSN).

New lending rates at private banks jumped by 45 bps to 10.90%, in line with efforts to maintain profit margins through consumer lending, which carries higher interest rates.

Conversely, new lending rates at foreign bank branches (KCBA), regional development banks (BPD), and state-owned banks (BUMN) dropped by 43 bps, 23 bps, and 11 bps, respectively, to 8.15%, 9.32%, and 8.41%.

The decline in new lending rates across most bank groups indicates an ongoing transmission of policy rate cuts to the credit market and reflects the lagged impact of the BI Rate reduction.

Meanwhile, the cost of funds for lending (HPDK) remained stable in June 2025 compared to the previous month at 3.64%, particularly within state-owned banks and private banks, which stood at 3.56% and 3.58%, respectively.

However, overhead costs (OHC) rose by 17 bps to 4.15%, driven by higher labor expenses and other costs related to goods and services procurement.