Property - Property credit disbursement increases, NPL improves

Property - Property credit disbursement increases, NPL improves The high interest rate regime does not appear to make property credit quality worse. The ratio of non-performing loans (NPL) for property loans is actually slowly continuing to improve, followed by increasing credit distribution. If we refer to Bank Indonesia (BI) data, the NPL for property loans as of June 2024 was at the level of 2.64%, an improvement from the same period last year at the level of 2.72%. However, this position is slightly higher compared to the end of last year which was at the level of 2.47%. Specifically, the NPL in the landed housing mortgage (KPR) sector in the same period was at the level of 2.40%, also down from the same position last year at the level of 2.51%. Meanwhile, NPL in the flat NPL sector increased slightly in June 2023, around 2.37% to 2.62% in June 2024. The decline in property credit NPLs is in line with increasingly aggressive credit growth in this segment. As of June 2024, industrial property credit grew 11.1% yoy, while in June 2023, property credit growth was only 6.55% yoy. (Source : Kontan) Comment : In line with our expectations (see our previous report), the property loan segment will play an important role in overall sector loan growth, despite the high interest rate environment. We kept our consumer and total sector loan growth forecast this year (still within OJK and BI banking sector loan growth expectations). We maintain our overweight stance for the sector, with BBRI and BBNI as the picks.