Banking - BI optimistic ‘23F loan growth is achievable

Banking - BI optimistic ‘23F loan growth is achievable Bank Indonesia (BI) is optimistic that the rate of banking credit this year will grow in the range of 9%-11% yoy. BI noted that banking credit grew 8.96% yoy in Sept23. BI view that banking resilience until Sept23 remain well managed amidst the uncertain global situation. BI also stated that banking industry capital continue to strong, with adequate liquidity and manageable credit risk. (Source : Bisnis Indonesia). Comment : We kept our ‘23F banking industry loan growth unchanged at 9%-10% yoy, which will be driven mainly by working capital loan. Consumer credit will play important role, while we also expect investment loan to book another better growth figure. Aside from our expectation on double digit loan growth, we also view that the ongoing loan repricing, stable asset quality improvement and softened provisions should be translated as a solid headwind for ‘23F banks earnings growth. Maintain our overweight rating for Banking sector, with BBRI and BBNI as our top picks.