Banking - High SRBI interest increases non-TPF funds

Banking - High SRBI interest increases non-TPF funds Bank Indonesia (BI) instruments has become a special attraction with the high returns on offer. As a result, this has an impact on increasing interest on several investment instruments, which creates expensive liquidity for banks. The presence of SRBI since September 15, 2023, is in line with the condition of growth in third-party funds (DPK) in banking, which is growing more slowly than credit growth. As of June 2024, bank deposits grew 8.45% on an annual basis (YoY), while credit grew 12.36% YoY. In line with SRBI interest continuing to increase, interbank loan interest, as stated in the Indonesian index, also rose. Indonesia's interest rate as of August 6, 2024, is at 6.25%, and the trend has been increasing since the first SRBI auction, when at that time the Indonesian interest rate was at 5.6%. (Source : Kontan) Comment : High interest environment remain in place, albeit potentiallnya start to softer. As expected non TPF get the impact from SRBI. We expect bank cost of funding will start to softened following its peak in Feb24. On the left handside of the balance sheet, portion on loan to asset and EA remain solid and thus will maintain bank sustainability. Maintain overweight for banking sector with BBRI and BBNI as the pick.