Jakarta. Indonesia’s bank credit growth accelerated to 13.58% year-on-year in July, exceeding Bank Indonesia’s 8-12% target range for the end of 2026. However, Rp 2,548 quadrillion ($143.56 billion) in approved credit facilities remained undisbursed as businesses continued to hold back borrowing amid economic uncertainty.

The July figure marked the fastest credit growth recorded so far this year, up from 12.67% in June.

Investment loans remained the main driver, expanding 25.13% year-on-year. Working capital loans grew 11.04%, while consumer loans rose at a much slower pace of 5.38%.

The acceleration comes despite a large amount of credit that banks have approved but borrowers have yet to draw down. Undisbursed loans stood at Rp 2,548 quadrillion, equivalent to 21.81% of the total available credit ceiling.

The sizeable amount suggests that banks still have substantial financing capacity, but businesses remain cautious about using the facilities available to them amid lingering economic uncertainty.

Bank Indonesia Acting Governor Destry Damayanti said the stronger credit growth was also supported by the central bank’s accommodative macroprudential policy, including incentives under its Macroprudential Liquidity Incentive Policy, (KLM) aimed at encouraging lending to priority sectors.

“As of the first week of August 2026, banks had received Rp 446.5 trillion in KLM incentives, comprising Rp 368.4 trillion through the financing channel, Rp 73.2 trillion through the interest rate channel, and Rp 4.9 trillion through the financing-to-funding channel,” Destry said at a press conference on Wednesday.

Credit growth had slowed to 9.37% in February from 9.96% in January before recovering in the following months. Lending growth reached 11.51% in May, accelerated to 12.67% in June, and climbed further to 13.58% in July.

The faster lending growth, however, has coincided with a decline in banks’ liquidity buffers.

The ratio of liquid assets to third-party funds, known as AL/DPK, fell to 23.10% in July from 27.54% in January. The ratio had reached 27.85% in March before declining to 25.39% in April, 24.74% in May, and 23.08% in June.

Corporate Loans Take the Lead
Permata Bank Chief Economist Josua Pardede expects corporate lending to remain the main driver of credit growth in the second half of 2026, with manufacturing among the most attractive sectors.

Transportation and warehousing, trade, healthcare, education, and construction could also see stronger lending, particularly projects with clear sources of repayment.

New lending in the second quarter was strongest in transportation, warehousing and communication, education services, manufacturing, construction, healthcare, and social activities. In the third quarter, banks expect lending growth to shift mainly toward manufacturing, wholesale and retail trade, and financial services.

“Corporate conditions remain fairly supportive. Business surveys show that liquidity and profitability are still in good shape, while access to credit remains relatively easy, although both liquidity and profit indicators have declined slightly from the previous quarter,” Josua told Investor Daily.

Within manufacturing, Josua highlighted food and beverages, machinery and equipment, basic metals, transportation equipment, downstream industries, and suppliers integrated into large companies’ production chains.

Construction also remains attractive, provided projects have clear payment certainty, particularly government and state-owned enterprise projects, as well as industrial estates, logistics, and utilities.

He said banks should not impose broad sector-wide restrictions but should remain cautious toward companies heavily dependent on imported raw materials, particularly those earning revenue in rupiah while carrying dollar-denominated debt.

Other areas requiring greater scrutiny include companies with thin margins that cannot pass higher costs on to consumers, highly indebted commodity businesses that rely on elevated commodity prices, and speculative property projects without strong pre-sales.

Consumer Lending Remains Weak
Consumer credit is expected to continue growing in the second half, but it will remain weaker than corporate lending, Josua said.

Bank Indonesia’s Banking Survey showed that multipurpose loans would be banks’ main priority in the third quarter, followed by mortgages and vehicle loans. Lending standards for consumer credit are also expected to loosen slightly.

Actual lending data, however, points to slowing demand. Consumer loans grew 5.75% year-on-year in June before easing to 5.38% in July, far below the pace of investment lending.

Household consumption is projected to grow around 5.16% in the third quarter and 5.13% in the fourth quarter, suggesting there will be no significant surge in household demand that could drive consumer credit back to double-digit growth.

Josua said rising installment burdens were another factor to watch.

Bank Indonesia’s July Consumer Survey showed consumer confidence remained optimistic at 116.8, although slightly lower than 117.8 in June. At the same time, the share of income allocated to debt installments increased to 10.5% from 10%, while the portion allocated to savings remained broadly unchanged.

The increase in debt repayments was recorded across most spending groups.

“As the transmission of previous interest rate increases continues, consumers will increasingly consider the size of their monthly installments before taking out mortgages, vehicle loans, or unsecured loans,” Josua said.

“Bank lending rates stood at around 8.81% in June. I therefore expect consumer credit to continue growing at a mid-single-digit pace of around 5-7% through the end of the year, rather than returning to double-digit growth.”

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