Jakarta. Finance Minister Purbaya Yudhi Sadewa has highlighted Indonesia’s persistently high banking net interest margin (NIM), calling it a long-standing structural issue despite recent monetary easing.

“This has been a problem in our banking sector for maybe 30 or 40 years. Our net interest margin is large, the highest in the world and beyond,” Purbaya said to laughter during an economic outlook event at Graha CIMB Niaga in Jakarta on Thursday evening.

His remarks came as Bank Indonesia has repeatedly cut its benchmark rate, while lending rates in the banking sector remain relatively high, creating the perception of a gap between monetary policy at the authority level and its transmission to the real economy.

Data from the Financial Services Authority (OJK) shows the industry’s average NIM stood at 4.56% in December 2025, slightly down from 4.62% a year earlier. However, several major banks still posted NIMs in the 5%–6% range, far higher than in advanced economies such as the United States, where NIM averages about 2%–3%, and Australia at around 2%.

Purbaya noted that Indonesia’s banking industry still reflects an oligopolistic structure, which slows the push to lower lending rates and keeps margins elevated.

“From an economist’s perspective, our banking structure tends to be oligopolistic. The central bank should be able to regulate that. I don’t know how exactly, but there should be a way to bring it down,” he said.

Despite the structural concerns, Purbaya sees early signs of improvement following Bank Indonesia’s rate cuts, stressing that monetary policy transmission to the real sector takes time.

“What is clear is that there is a delay from monetary policy to the real sector and to banking. I don’t know how long the delay is, but in the broader economy, within four months we can already see improvement in direction because the central bank lowered rates,” he said.

As state treasurer, Purbaya also assured that market liquidity remains sufficient to support further room for rate reductions. He explained that although Rp 70 trillion ($4.15 billion) in fresh funds had been withdrawn from banks, the money was returning to the system through various government development programs.

“We are ensuring liquidity in the market is sufficient. That means room for lower interest rates should open up further,” Purbaya said.