Banking – Bank credit in 2024 grows by 10.39% yoy

Banking – Bank credit in 2024 grows by 10.39% yoy Bank Indonesia (BI) assesses that the role of credit/financing in 2024 remains strong in supporting economic growth. Credit growth in 2024 reached 10.39% (yoy), within the Bank Indonesia forecast range of 10–12%. From the supply side, credit growth is influenced by the sustained interest in bank credit distribution, the continued reallocation of liquid assets to credit by banks, the availability of funding support from the growth of DPK, and the positive impact of KLM Bank Indonesia. From the demand side, credit growth is supported by the stable performance of corporate businesses, amidst limited household consumption,” explained BI Communication Director, Ramdan Denny Prakoso. Based on the usage groups, the growth of working capital credit, investment credit, and consumption credit were 8.35% (yoy), 13.62% (yoy), and 10.61% (yoy), respectively. Sharia financing grew by 9.87% (yoy), while MSME credit grew by 3.37% (yoy). BI predicts that in the future, credit growth will increase within the target range of 11–13% in 2025 in line with the continued good economic growth prospects and the support of Bank Indonesia’s macroprudential policies. Various incentive policies from the Government are also expected to further boost credit demand. (Source : Emiten News) Comment : Our conservative upper-bound 2025 loan growth forecast for the banking sector, as detailed in our ‘25F outlook (mid Nov24) and recent sector report (31 Dec 24), aligns with Bank Indonesia’s lower-end projection. We anticipate this growth trajectory to be primarily driven by the wholesale segment, with working capital loans remaining a key contributor. Furthermore, we foresee a notable surge in investment financing demand, avour ed by the implementation of various new government initiatives. Within the consumer loan segment, we expect property loans to exhibit marginally stronger growth compared to auto financing. Maintaining our Overweight stance on the banking sector, we avour BBCA and BMRI as our preferred investment choices. Within the Islamic banking landscape, BRIS emerges as a compelling investment proposition.