The government has extended its IDR200tn placement in state-owned banks through July 2027, while Bank Indonesia continues to encourage banks to redirect liquidity from SRBI into lending. This suggests that liquidity is no longer simply about how much funding is available, but how effectively it can be transmitted into credit and economic activity. Credit growth is already showing signs of acceleration, reaching 12.67% YoY in June 2026, up from 11.51% in May.
 

Against this backdrop, our economist notes that elevated undisbursed loans do not necessarily indicate excess banking liquidity. As of May 2026, undisbursed loans stood at IDR2,575tn, largely reflecting committed credit facilities that have yet to be drawn down. As such, the figure represents room for future credit growth, although actual realization will still depend on stronger credit demand and higher utilization of existing facilities.

For banks, the combination of easier liquidity and accelerating credit growth creates room to step up lending. The next challenge, however, is ensuring that stronger loan growth does not come at the expense of higher funding costs. Additional government liquidity and BI’s push to reduce funds parked in monetary instruments could help ease funding pressure, giving banks more room to protect margins.

We therefore believe banks with strong funding bases, solid CASA, and better NIM resilience will be better positioned to capture the credit-growth momentum. As liquidity increasingly finds its way into lending, the focus is shifting from how much liquidity banks have to how profitably they can turn it into growth.