DBS Indonesia Projects BI Rate to Rise to 6.00% by End of 2026

PT Bank DBS Indonesia has projected that Indonesia's benchmark interest rate (BI Rate) will continue to rise through the end of 2026, reaching 6.00% by the fourth quarter. The projection is based on assessments of the rupiah's stability and Indonesia's inflation levels. According to Djoko Soelistyo, Head of Investment & Insurance Product at DBS Indonesia, Bank Indonesia will likely raise the BI Rate gradually, moving to 5.75% in the second quarter of 2026 and then to 6.00% in the third quarter through year-end.

While acknowledging that higher interest rates will increase loan repayments for customers and burden both the public and banks, Djoko noted that raising the BI Rate appears to be the most prudent approach for stabilizing the rupiah's exchange rate. The rate increases are expected to force banks to raise their lending rates correspondingly, making credit installments more expensive for borrowers across the economy.

In response to these projections, DBS Indonesia's Consumer Banking Director Melfrida Gultom emphasized that the bank consistently conducts stress tests to measure its business potential and risks. The bank has implemented strengthened credit underwriting processes to maintain its non-performing loan (NPL) ratio at stable levels. Melfrida confirmed that DBS Indonesia is prepared to manage the impact of rising rates on its operations.

DBS Indonesia's primary business strategy remains focused on wealth management, targeting affluent customer segments. Despite this focus, the bank continues to extend credit to customers meeting its eligibility criteria, including through premium credit card offerings. Melfrida noted that the wealth management strategy helps moderate the bank's cost of funds (COF) that may rise due to the BI Rate increase, since affluent customers typically hold substantial liquid deposits that support DBS Indonesia's third-party fund (DPK) growth.