Goldman Sachs: Banks in the Asia-Pacific region are showing strong growth momentum this year and we are optimistic about Indonesian banks.

Goldman Sachs has released a research report on the banking sector in the Asia-Pacific region, stating that the industry will continue its growth momentum from 2025 into 2026, especially in ASEAN and Hong Kong/Regional banks. In 2025, net interest income growth was driven by strong inflows of deposits, rather than traditional loan growth, and this structural trend is expected to continue supporting profit growth in 2026. At the same time, the banking sector plans to maintain a high dividend yield (forecasted median of 5.5% in 2026) and an active share buyback strategy, with capital return remaining a strategic focus. Despite the overall positive outlook, Goldman Sachs points out that some markets still face challenges, such as in Hong Kong where credit risks related to commercial real estate need to be closely monitored, and in Thailand, where weak macroeconomic conditions are putting pressure on banking sector growth. Goldman Sachs believes that valuations of banks in the region are still relatively low compared to global peers, and profitability is expected to continue to improve from 2026 to 2028. Potential upward revisions of profit guidance and strong performance could serve as positive catalysts. Goldman Sachs is particularly bullish on Indonesian banks, believing that the easing of funding costs will further enhance profitability, a positive development that is not yet fully reflected in the market.