Last month Indonesia’s Financial Services Authority (OJK) unveiled its plan to lower state-owned banks’ net interest margin (NIM) to the range of 3-4% in a bid to push the country’s lending rates down, hence boosting credit growth and economic activity. Compared to its regional peers, Indonesia’s NIM is high. On average the NIM of Indonesian banks stands at 5.39%, considerably higher than average NIMs in Thailand, Malaysia and the Philippines. When the new regulation will be implemented remains unknown.
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