The Financial Services Authority (OJK) of Indonesia has affirmed the robust health of the national banking industry, even amidst escalating global geopolitical risks. This includes the volatile situation in the Middle East, specifically the potential for conflict between Iran and the U.S.
Dian Ediana Rae, the Chief Executive of OJK’s Banking Supervision, highlighted that the direct impact of these conflicts on Indonesian banks remains notably limited. This assessment is based on the minimal exposure of the nation’s banking sector to the Middle East region. Furthermore, Rae emphatically dismissed any potential for a mass withdrawal of funds, commonly known as a bank run, within the Indonesian banking system.
“We view the potential for a bank run as highly insignificant, if not entirely nonexistent, given Indonesia’s remarkably conducive political, security, and economic environment,” Dian stated in an official release. She further elaborated that “a bank run is generally triggered by issues concerning public confidence in the banking system,” underscoring the current stability.
Dian clarified that the direct financial ties between national banks and non-resident entities in the Middle East, both in terms of assets and liabilities, remain minimal. This limited exposure ensures that there will be no significant adverse impact on the banking sector’s capital adequacy or liquidity levels.
Nevertheless, Dian cautioned that Indonesia, operating as an open economic system, remains susceptible to global dynamics. She elaborated that if the conflicts were to persist over an extended period, indirect repercussions could manifest through disruptions in trade routes and volatility in financial markets.
“Should the current geopolitical conflict escalate and persist for a considerable duration, it holds the potential to become a significant source of vulnerability, impacting the Indonesian economy through both trade channels and financial markets,” she explained, emphasizing the need for vigilance.
Amidst these global pressures, the OJK maintains that the national banking sector’s resilience remains exceptionally solid. As of February 2026, the Capital Adequacy Ratio (CAR), a key indicator of financial strength, was recorded at an impressive 25.83 percent.
“Banking credit risk is also well-managed, as reflected by a Non-Performing Loan (NPL) ratio that remains commendably below 3 percent, standing at 2.17 percent. Furthermore, the trend in provisioning coverage for Allowance for Impaired Loans (CKPN) has remained relatively stable,” she added, highlighting robust risk management practices.
Banking liquidity is also reported to be well-maintained and relatively stable. Key indicators such as Assets to Deposits (AL/DPK) and Assets to Non-Core Deposits (AL/NCD) comfortably exceed their respective thresholds of 10 percent and 50 percent. Moreover, the Loan-to-Deposit Ratio (LDR) is robust at 84.72 percent, consistently maintained within the healthy range of 78-92 percent.
The banking sector’s Liquidity Coverage Ratio (LCR) stands at a significant 195.64 percent. This figure is considerably above the regulatory threshold, indicating ample capacity to meet the banking sector’s short-term liquidity needs moving forward.
“The OJK is continuously monitoring risk developments and consistently directs banks to implement comprehensive risk management strategies,” she affirmed, highlighting the proactive regulatory approach.
In addition to ongoing monitoring, the OJK is also intensifying individual bank supervision amidst the prevailing global uncertainties. This rigorous oversight ensures banking resilience is robustly tested through comprehensive stress tests.
“The results of both OJK’s and the banks’ internal stress tests consistently demonstrate that the current level of banking capitalization is more than adequate to withstand risks stemming from significant shifts in Indonesia’s macroeconomic conditions,” she concluded, providing reassurance about the sector’s preparedness.
Summary
The Financial Services Authority (OJK) has affirmed the strong health of Indonesia’s banking industry, despite escalating global geopolitical risks such as the potential US-Iran conflict. OJK’s Chief Executive of Banking Supervision, Dian Ediana Rae, noted that direct impacts on national banks are notably limited due to minimal exposure to the Middle East. Rae also dismissed any significant potential for a bank run, attributing this to Indonesia’s remarkably stable political, security, and economic environment.
Nevertheless, OJK cautioned that a prolonged conflict could pose indirect repercussions through disruptions in trade routes and financial market volatility. The national banking sector exhibits exceptional resilience, evidenced by an impressive Capital Adequacy Ratio (CAR) of 25.83 percent and a well-managed Non-Performing Loan (NPL) ratio of 2.17 percent. Banking liquidity remains robust, with the Liquidity Coverage Ratio (LCR) at 195.64 percent, and comprehensive stress tests confirm the sector’s strong capitalization to withstand significant macroeconomic shifts.