Banking - Outstanding Bank "Buy Now, Pay Later" Credit Grows 36.6% as of July 2024

Banking - Outstanding Bank "Buy Now, Pay Later" Credit Grows 36.6% as of July 2024 Bank-owned "Buy Now, Pay Later" (BNPL) products have seen surging demand this year. This is evident in the growth of outstanding BNPL credit. Dian Ediana Rae, Chief Executive of OJK Banking Supervision, reported that outstanding BNPL credit reached IDR18.01 tn as of July 2024. This represents a 36.65% yoy increase, though it's a slowdown from the 49.43% yoy growth observed the previous month. "The total number of BNPL accounts reached 17.90 mn, up from 17.48 mn in June 2024," stated Rae on Friday. Rae added that this growth is accompanied by improved credit risk, with the non-performing loan (NPL) ratio for bank BNPL credit at 2.24%, down from 2.5% in June 2024. The increasing profitability of the BNPL business has attracted significant interest from the banking industry. (Source : Kontan) Comment : We anticipate continued growth in the Paylater business, positively impacting banking earnings performance. The NPL ratio in this segment is expected to remain manageable, supported by the stable recovery of the sector. We maintain our Overweight stance for the sector, with BBRI and BBNI as our top picks.