Banking - Corporate credit demand could strengthen in Feb24

Banking - Corporate credit demand could strengthen in Feb24 Bank Indonesia (BI) reports that corporate financing needs will increase in February. This is reflected in the WBT for corporate financing of 11.1%, higher than the WBT in January (6.5%). Based on BI's February 2024 Banking Financing Survey Report, this growth was mainly driven by increasing needs in the agricultural business sector, information and communications, and real estate. According to the survey, corporate financing sources mainly come from their own funds, reaching 67.7%, higher than in January 2024. This is followed by the use of withdrawal allowance facilities, namely 9.7%, although lower than the previous month. Also, domestic banking financing, namely 8.6%, indicated an increase compared to the previous month. Meanwhile, BI projects that in the next three months, or May 2024, corporate financing needs will increase with a weighted net balance (WNB) of 36.2%. (Source : Kontan) Comment : Assuming the Feb24 figures will continue in Mar24, the total corporate loan in 1Q24 could grow higher on a quarterly basis compared to the last quarter in 4Q23. In all, manufacturing should continue to play an important role in the overall demand for corporate segment loans. On the loan-based segment, we think working capital growth could continue surpassing investment loan growth. As a whole, banking industry loans could continue to record double-digit growth. Our ‘24F total loan for the banking sector is around 10%. The non-industrial loan will also play a crucial role in supporting the total industry loan. Maintain our overweight stance for the sector, with BBRI and BBNI as the top picks.