Banking: Jan24 credit grew by 11.5% yoy

Banking: Jan24 credit grew by 11.5% yoy Bank credit growth grew by 11.5%yoy in Jan24 to IDR 7,009tn. Credit growth at the beginning of the year or ahead of the general election (Pemilu) was supported by all types of use. Investment credit shot up 12.8%yoy to IDR 1,867.3tn trillion, supported by transportation & communications and processing industry sectors, along with investment credit, grew 13.5%yoy to IDR 313.8 trillion. Working capital loan grew by 12.2%yoy in the same period to IDR 3,136.4tn. Meanwhile, consumer credit increased by 9.5%yoy to IDR 2,006.3tn driven by home ownership credit (KPR) and multipurpose credit. (Source: Investor Daily). Comment: We like the Jan24 loan growth which could overall support any latent slower loan growth in Feb24 and Mar24. BI is optimistic that ‘24F loan growth could reach 12% yoy, while OJK expects banking sector total credit growth this year to hover between 9 and 11% yoy. We forecast loan growth within the range of 10–11% and are likely not to arrive below the double-digit level, ceteris paribus. Working capital loans should remain the main driver, in our view. We also expect investment loans to start to grow better after the winner of the president and vice president elections has been confirmed. On consumer loans, we believe mortgages and other consumer loans will continue to play a crucial role in total consumer loan growth. Maintain our overweight stance in the banking sector, with BBRI and BBNI as our top picks.