Banking - Mortgage NPL likely well managed

Banking - Mortgage NPL likely well managed The slowing rate of property credit growth in 2023 will cause the property non-performing loan (NPL) ratio to also increase. According to Bank Indonesia NPL position as of Dec23 is at the level of 2.47%. This position increased from the same period the previous year which was 2.26%, but experienced an improvement from the previous month which was at the level of 2.59%. On detailed basis, the highest NPL for property loans was contributed by shophouse/shophouse ownership loans at 4.16%. Meanwhile, home ownership credit (KPR) for landed houses is still maintained at the level of 2.40%. Although it increased from the previous year's period by 2.02%. (Source: Kontan) Comment: We believe NPL should continue to be well managed overall. Continuing asset quality improvement will become as the main catalyst, while expectation on stable economic activity will overall cushioned any potential drawbacks. Latest relaxation on the property sector this year and its potential continuing sector growth will specifically underpinned property segment NPL to potential get healthier. Maintain OW on banking sector with BBRI and BBNI as the to pick.