Key reasons why Indonesia is considered one of the most attractive markets for financial institutions in Southeast Asia. Indonesia’s president has a target to grow the economy at 7%. Much of that growth could come from financial technologies: A McKinsey report on Indonesia’s digitalization said fintech firms could add up to 10% GDP to Indonesia’s economy by 2025.
Moody’s recently changed its outlook on the Indonesia banking industry to positive from stable, as it saw improvements in the country’s operating environment, asset quality and sovereign creditworthiness.
President director and CEO of Bank Mandiri said at a CNBC panel earlier this month that he does not see margins or profitability decreasing anytime soon as “excess to financing is still limited and if all banks were to grow rapidly, it will take at least five years for the market to converge.”
CEO of Indonesian Deposit Insurance Company said that the risks are “coming down” and he attributed it to the country’s healthy economic growth and stability in commodity prices. He also added that he considered the recent investment-grade rating for Indonesia from S&P global ratings to be an important vote of confidence.
Financial regulators in Indonesia have said they are planning to consolidate the sector through mergers and acquisitions, in order to create a stronger and more efficient banking system.
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