Banking - Total loan until Jun24 reached IDR7,478.4 tn

Banking - Total loan until Jun24 reached IDR7,478.4 tn The Financial Services Authority (OJK) recorded that bank credit distribution reached IDR7,478.4 tn until June 2024. This figure grew by 12.36% yoy. If viewed on a monthly basis, credit distribution increased by around IDR102.29 tn or around 1.39% mom. However, OJK Chief Executive of Banking Supervision Dian Ediana Rae revealed that several credit segments were experiencing a slowdown. These include MSME credit which only grew 5.68% yoy as of June 2024. Even though [MSME] growth is acknowledged to be slower than non-MSME credit he said. In the same period, Dian said that credit growth was also balanced by maintained credit quality. This is reflected in the ratio of non-performing loans (NPL) net at 0.78% net and gross NPL at 2.26%. Meanwhile, Dian said that the increase in NPL due to Covid-19 was quite under control, this was thanks to the credit restructuring stimulus affected by Covid-19 released by the OJK. In line with this, restructuring credit experienced a decrease in loan at risk (LAR) by 10.75% in May 2024, much lower than in May 2023 of 13.38%. "LAR is also projected to return to single digits, as was the LAR before the Covid-19 pandemic," he added. (Source : Kontan). Comment : Domestic total loan recorded another solid loan growth. The June 2024 loan growth arrives within OJK and Bank Indonesia ‘24F expectation and above our ‘24F forecast for banking industry total loan. We believe working capital will continue become as the main driver for this year total loan growth, while investment loan should play more role in 3Q24. Consumer loan likely to continue stable. Yet, we expect to see much slower growth on auto loan. Maintain our Overweight stance for the sector with BBRI and BBNI as the stock pick.