Macquarie has signaled a preference for larger Indonesian banks following February 2026 industry data that showed net interest margins fell by 14 basis points versus the fourth quarter of 2025. The decline in margins reflected banks passing on reductions in funding costs to customers, according to the data reviewed by the firm.
In its assessments, Macquarie retains Outperform ratings on two major lenders - Bank Central Asia (BBCA) and Bank Mandiri (BMRI) - identifying them as its leading choices among the country's banks. For the smaller-bank cohort, the firm highlighted Bank Syariah Indonesia (BRIS) as its preferred pick.
The February figures show year-over-year loan growth of 10.4 percent, though the pace of net new lending during the month remained subdued. Deposit expansion, by contrast, outstripped credit growth: deposits were up 14.8 percent year-over-year, which pushed the combined loan-to-deposit ratio lower to 87 percent from 88 percent when excluding Bank Central Asia.
Average funding costs across the top 15 banks declined by 9 basis points in the January-February period versus the fourth quarter of 2025. Among the large institutions, Bank Rakyat Indonesia (BBRI) recorded the largest benefit, with funding costs down 21 basis points over the same comparison.
On asset-quality-related metrics, credit charges held relatively steady at 1.26 percent in January-February 2026 compared with 1.20 percent in the fourth quarter of 2025. The combined effect of margin compression and asset expansion contributed to a fall in return on assets across the sector, which annualized at 2.16 percent - the lowest level recorded in three years. That weaker ROA partly reflects 11 percent year-over-year growth in total assets.
Profit performance for the sector improved year-over-year, with aggregate profit growth of 10.8 percent for the first two months of 2026. State-owned banks in particular - BBRI, BMRI and BRIS - each posted 17 percent year-over-year profit gains. Macquarie noted that Bank Mandiri and Bank Syariah Indonesia appear positioned to sustain stronger year-over-year profit growth, citing factors such as asset quality, credit charge momentum and balance-sheet trends.
The data paint a mixed picture: margins are under pressure because funding cost cuts have been transmitted to borrowers, yet deposit funding looks abundant relative to lending demand. Sector returns have softened even as profits have grown year-over-year early in 2026, driven in part by strong asset growth and stability in credit charges.