Banking - Banks are optimistic vehicle loan distribution will accelerate

Banking - Banks are optimistic vehicle loan distribution will accelerate Credit distribution to the Automotive (KKB) segment is projected to continue to accelerate in 2024. (BI) data as of October 2023 revealed that the KKB segment grew by 13.3% yoy, with a value of IDR 129 tn. This figure is higher than KKB credit distribution in the period of Sept23 which only grew 6.7% yoy (IDR 128.3 tn). The Association of Indonesian Financing Companies (APPI) also projects that motor vehicle sales will reach 6.5 million in 2024. A number of banks are also optimistic about welcoming next year with an even better KKB growth rate. (Source: Kontan). Comment: We believe loan to automotive industry will remain intact. Key for the growth is continuing low down payment and various promotion from dealer which will continue as competition getting stiffer. Longer instalment period of up to 8years and various auto event are also become another supporting sentiment, in our view. We also like continuing foreign investment to expand auto market in Indonesia which confirming the potential ongoing growth of the sector. In all, this would overall support bank loan growth in consumer / automotive segment