Banking - Eyeing for low-cost funding

Banking - Eyeing for low-cost funding The bank sets a strategy to raise cheap funds in Semester II-2024. Tight liquidity at a time when the trend of high interest rates is still hampering banking performance in collecting Third Party Funds (DPK). As a result, banks are maximizing their efforts to boost the DPK pool in the second semester of 2024 by scrambling for cheap funds or Current Account Saving Accounts (CASA), which come from savings and current accounts. Various efforts have been made by a number of banks to encourage more customers to save their funds in savings products. (Source : Kontan) Comment : The high interest rate environment will continue in 2H2H. A robust customer deposit mix will become the main key success. Strong footage in the retail segment with a huge deposit customer base will overall support the low-cost funding. Solid transactional baking will become an additional catalyst. We expect the latest 25bps 7DRR increase will not be directly transmitted to the cost of deposit in 2024, while the previous benchmark rate spikes likely will peak in 1H24. Maintain an overweight stance for the banking sector, with BBRI and BBNI as our top picks.