ASEAN Banking Performance Compared: Indonesian Banks Lead Profits, Singapore Excels in Stability
Banks in Indonesia, Malaysia, and Singapore show sharply different financial strengths despite operating within the same ASEAN integration framework, according to a 2026 peer-reviewed study by Dea Agustin, Wiralestari, and Dica Lady Silvera from Universitas Jambi, Indonesia. Published in the International Journal of Integrative Sciences, the research compares the financial performance of major banks across the three countries from 2020 to 2024, a period spanning the COVID-19 pandemic and post-pandemic recovery. The findings matter because ASEAN banking systems are increasingly interconnected, meaning weaknesses in one country can quickly affect regional financial stability, investors, and policymakers.
Why ASEAN banking performance matters now
ASEAN financial integration, strengthened by the ASEAN Banking Integration Framework (ABIF), has encouraged cross-border banking activity, competition, and capital flows. At the same time, it has increased exposure to global shocks such as interest-rate volatility, trade disruptions, and geopolitical uncertainty. Banks in Indonesia, Malaysia, and Singapore play outsized roles in their national economies and are classified as systemically important institutions. Understanding how their performance differs helps regulators manage risk, guides investors in portfolio decisions, and informs policymakers working on regional financial resilience.
Indonesia represents an emerging market banking system with strong ties to small and medium-sized enterprises. Malaysia operates a dual system combining conventional and Islamic banking. Singapore functions as a global financial hub with advanced regulation and digitalization. These structural differences shape how banks manage profitability, capital, efficiency, and credit risk.
How the comparison was conducted
The researchers used a quantitative, descriptive-comparative approach. They analyzed secondary data from audited annual reports of the three largest conventional banks in each country:
1. Indonesia: Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI), Bank Central Asia (BCA)
2. Malaysia: Maybank, CIMB, Public Bank
3. Singapore: DBS, OCBC, United Overseas Bank (UOB)
The dataset covered five years (2020–2024), resulting in 45 observations. Performance was assessed using five widely recognized banking indicators:
1. Return on Assets (ROA) for profitability
2. Loan to Deposit Ratio (LDR) for liquidity
3. Capital Adequacy Ratio (CAR) for capital strength
4. Operating Expenses to Operating Income (BOPO) for efficiency
5. Non-Performing Loans (NPL) for credit risk
Statistical tests were applied to determine whether differences between countries were significant.
Key findings at a glance
The study found statistically significant differences across all five indicators.
Indonesian banks: high profit, higher risk
1. Recorded the highest average profitability, with ROA around 2.8 percent.
2. Showed the strongest capital buffers, with average CAR close to 23.8 percent.
3. Also had higher operating costs and credit risk, reflected in elevated BOPO and NPL ratios.
4. Performance was more volatile, especially during the pandemic years.
Malaysian banks: steady and efficient
1. Delivered moderate but stable profitability.
2. Maintained lower BOPO ratios, signaling better cost efficiency.
3. Posted low NPL levels, indicating strong asset quality
4. Displayed consistent performance with less fluctuation over time.
Singaporean banks: stability and resilience
1. Showed highly consistent performance across all indicators.
2. Maintained healthy liquidity, solid capital, and low NPLs.
3. Demonstrated strong risk management and operational efficiency, even during global uncertainty.
Overall, Singapore emerged as the most stable banking system, Malaysia as the most efficient, and Indonesia as the most profitable but also the most exposed to operational and credit risks.
What this means in the real world
For investors, the findings suggest that risk and return profiles vary widely across ASEAN. Indonesian banks may appeal to growth-oriented investors seeking higher returns, while Singaporean banks suit those prioritizing stability and long-term security. Malaysian banks occupy a middle ground, balancing efficiency and moderate risk.
For bank managers, the results highlight the importance of aligning profitability with efficiency and risk control. Indonesian banks, in particular, could strengthen competitiveness by reducing operating costs through digitalization and improving credit risk management.
For regulators and policymakers, the study underscores that regional integration does not eliminate national differences. Tailored regulatory approaches remain essential, especially as shocks can spill across borders within ASEAN’s integrated financial system.
Insight from the researchers
According to the authors from Universitas Jambi, differences in performance reflect deeper structural and managerial factors. As Dea Agustin and colleagues explain, banks send “signals” to investors and regulators through financial ratios, and higher profits alone do not guarantee stability. Strong capital and profitability must be balanced with efficiency and sound risk management to sustain long-term resilience.
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