Macquarie favors large Indonesian bank stocks due to profit margin pressures

Investing.com - Macquarie says that after February 2026 data showed net interest margin down 14 basis points versus the fourth quarter of 2025 (as reduced funding costs were passed on to clients), the firm is more inclined toward Indonesia’s large banks.

The company maintains an outperform-the-market rating on Central Asia Bank (IDX:BBCA) and Bank Mandiri (IDX:BMRI), positioning them as top picks among Indonesian lenders. Among smaller banks, Macquarie says Bank Syariah Indonesia (IDX:BRIS) is its preferred choice. Loan growth year over year in February reached 10.4%, even though new lending during the month remained slow.

Margins grew 14.8% year over year, outpacing loan growth, driving the combined loan-to-deposit ratio (excluding Central Asia Bank) down from 88% to 87%. Average funding costs for January–February 2026 fell 9 basis points versus the fourth quarter of 2025 (covering the top 15 banks), with Bank Rakyat Indonesia (IDX:BBRI) benefiting the most, down 21 basis points.

Credit costs in January–February 2026 remained stable at 1.26%, versus 1.20% in the fourth quarter of 2025. Annualized return on sector assets fell to 2.16%, the lowest in three years, partly reflecting 11% year-over-year growth in assets.

Profit in the first two months of 2026 grew 10.8% year over year, with state-owned banks Bank Rakyat Indonesia, Bank Mandiri, and Bank Syariah Indonesia all posting 17% year-over-year growth. Macquarie says, based on asset quality, the trajectory of credit costs, and balance-sheet trends, Bank Mandiri and Bank Syariah Indonesia should be able to sustain stronger year-over-year growth.

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