Banking - Property sector NPL reached 2.72% as of April 2024

Banking - Property sector NPL reached 2.72% as of April 2024 The non-performing loans (NPL) ratio of banks in the property sector has been recorded to have crept up since the beginning of 2024. In fact, as a whole industry, banking NPLs have actually experienced an improvement. Looking at Bank Indonesia (BI) data, property NPL as of April 2024 was recorded at 2.72%. This figure increased from the previous month at 2.61% and was even higher than the April 2023 period at 2.64%. Meanwhile, the gross NPL of the banking industry as a whole as of March 2024 was recorded at 2.25%. There was a slight improvement from the same period the previous year which was at the level of 2.49%. (Source: Kontan) Comment : We might see a slight increase figure, yet with stable asset quality improvement last year and a soft change of collectability, the overall NPL in ‘24F could remain soft. Higher loan repriced yield likely to be soft as well, since historically proven so and consumer segment is tended to be more sensitive to increasing interest rate. As such, bank will be more careful to repriced the segment yield. Maintain our OW stance for the banking sector.