Banking - The COVID-19 restructuring policy ends, and KBMI IV keeps the LAR and NPL ratios awake

Banking - The COVID-19 restructuring policy ends, and KBMI IV keeps the LAR and NPL ratios awake With the end of the COVID-19 restructuring policy in March 2024, big banks ensure that the loan-at-risk (LAR) ratio and the non-performing loan (NPL) coverage of banks in the Core Capital-Based Bank (KBMI) IV ranks are projected to be well awake. BBCA management ensures its restructuring credit portfolio continues to decline, along with debtor business recovery. Of the total amount of current credit restructuring, category one dominates. Another bank, Bank Mandiri (BMRI), also records LARs that are already lower than pandemic times. Meanwhile, as the bank with the largest market in the UMKM segment, Bank Rakyat Indonesia (BBRI) welcomed the decision to end the relaxation. According to BBRI, the bank has prepared a soft-landing strategy and is optimistic that the end of the relaxation will not have a significant impact on BBRI's credit quality performance or financial performance in general. (Source: Kontan) Comment : In line with our expectations, the banking sector, especially banks under our coverage, will continue in good shape after the COVID credit restructuring policy is fully lifted, in our view. The story of continuing earnings growth expectations this year will remain intact and will be supported by: (1) potential steady loan growth demand; (2) better NIM coupled with steady CIR; and (3) asset quality improvement. We think several key metrics in the Mar24 and 1Q24 figures are likely to arrive within ours and street expectations. Maintain our overweight stance in the banking sector with BUY BBRI and BBNI as our top picks.