BTN expects slower profit growth as competition raises funding costs
The Indonesian bank may adjust its credit growth target if funding remains expensive, but says government-backed housing lending will continue.
Indonesia’s PT Bank Tabungan Negara (Persero) Tbk expects profit growth to slow in the second half of 2026 as rising funding costs weigh on net interest income, president director Nixon L.P. Napitupulu said. He was speaking at a discussion in Bandung, West Java, on 23 October 2026.
Nixon said competition for deposits had intensified as banking liquidity tightened, with many interest rate offers for large institutional deposits exceeding 8%. Depositors were choosing banks offering the highest returns, driving up funding expenses and potentially squeezing banks’ margins.
BTN is seeking to protect profitability by improving asset quality, streamlining operations and controlling funding costs. Nixon said its non-performing loan ratio reached 2.9% in September 2026, meeting its year-end target early. The ratio could fall to 2.7%-2.8% in December 2026, potentially reducing credit costs and provisioning needs.
The bank will consider revising its credit growth target if funding costs remain high, Nixon said. Lending for government programmes, including Fasilitas Likuiditas Pembiayaan Perumahan (FLPP), would nevertheless continue because the government had prepared liquidity support.
Nixon also welcomed Bank Indonesia’s reduction in banks’ reserve requirements. He estimated that a 1% reduction could provide BTN with up to around Rp4 trillion in additional liquidity. If BTN could benefit from a 2% reduction, he estimated the additional liquidity at Rp6 trillion-Rp8 trillion, while noting that its treasury team was still calculating the precise impact.
