ndonesia’s banking sector is projected to see a decline in profits amid a depreciating rupiah and rising key interest rates, according to the latest research report published by local brokerage firm Samuel Sekuritas.
The rupiah dropped to its lowest level at Rp 18,178 per United States dollar on June 8, marking a 9 percent decline since the beginning of the year.
To defend the currency, Bank Indonesia (BI) has raised its benchmark interest rate twice, by 50 basis points (bps) in May and another 25 bps in a surprise move on June 9.
Read also: BI hikes rate in surprising move, rupiah gains
In the research report published on Friday, Samuel Sekuritas noted that higher rates and a weaker currency could pressure banks with a potential increase in cost of funds, particularly for names reliant on expensive time deposits, and a narrower net interest margin (NIM), as well as deteriorating asset quality as borrowers experienced lower spending power.
“Weaker rupiah currency also feeds into imported inflation, reinforcing higher-for-longer rate stance and prolonging margin squeeze,” reads the report.
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Due to elevated funding costs, sustained NIM pressure and higher provisions, Samuel Sekuritas has lowered its 2026 earnings growth forecast for banks from
