Banking - Remaining Covid-19 restructuring credit around IDR 285tn

Banking - Remaining Covid-19 restructuring credit around IDR 285tn Credit relaxation in the form of restructuring during the Covid-19 pandemic will end in March 2024 and will certainly not be extended. In line with this, the amount of Covid-19 restructuring credit now remains IDR 285.3tn as of Nov23. The Financial Services Authority (OJK) noted that this number continues to record a downward trend. For the record, in the previous month the restructuring outstanding was still around IDR301.1tn, meaning a decrease of IDR 15.8tn. In terms of the number of customers, a downward trend was also recorded. As of Nov23, the number of customers was recorded at 1.14 million customers, down from October 2023 which reached 1.22 million customers. (Source: Kontan). Comment: We believe credit restructuring will continue to decline and by the time the relaxation will be fully lifted, banks under our coverage will remain in a solid condition. Continuing asset quality improvement and a well shape key metrics should become as another signal that banking sector has start to back to its pre-covid condition, even since around 1H23 performance. LAR should continue to stay low, and overall will help earnings to reach within the same level in ‘23F. Maintain our OW stance on the sector with BBRI and BBNI as our top pick.