Banking - The room for reducing credit interest is narrowing

Banking - The room for reducing credit interest is narrowing The certainty of a reduction in Bank Indonesia's (BI) benchmark interest rate is increasingly open after the US central bank, The Fed, gave a signal to reduce interest rates. However, this is unlikely to have an impact on reducing bank credit interest. Not without reason; this is because the Basic Credit Interest Rate (SBDK) has not increased much in this era of high interest rates. In fact, banking prime lending rates were recorded to have experienced a slight decline. BI data records that banking prime lending rates as of June 2024 were recorded at the level of 8.80%. When compared with the position at the end of 2023, banking prime lending rates are at the level of 8.81%. (Source : Kontan) Comment : We never put the impact of increasing / decreasing benchmark rate to banking stocks since our outlook for this year released in November 2023. Historically clearly confirmed that the impact will have a lag time. As such we believe the potential impact of lower interest rate this year will be happened in 2025. Maintain our OW stance for the sector with BBRI and BBNI as our top pick.