Banking - The trend of tightening liquidity is not over yet.

Banking - The trend of tightening liquidity is not over yet. The tightening liquidity conditions of domestic banks will not end yet. Various efforts continue to be made by banks to maintain their liquidity to carry out their intermediation functions, in this case distributing credit. Data from the Financial Services Authority (OJK) noted that the banking LDR continued to increase throughout 2024 until July 2024 at the level of 86.51%. If pulled back to previous years, this is the highest LDR since August 2020, which is at the level of 85.38%. If you look at banking liquidity using the LDR ratio, banks from KBMI 3 are the highest. As of June 2024, the LDR ratio for banks in this group will reach 89.50%. However, in the Banking Business Orientation Survey in the third quarter of 2024 conducted by the OJK for industry players, it is estimated that liquidity risks are still maintained and improved compared to the previous quarter. This is driven by the expectation that the bank's liquidity instruments (cash and cash equivalents) will still grow. "The component of liquid instruments that is projected to encourage and have a significant effect on the increase is securities issued by Bank Indonesia," the survey said. (Source : Kontan) Comment : We believe the tightened liquidity environment is likely to continue in 2H24, albeit softer than 1H24. Focus on CASA to maintain a reasonable NIM level will continue to become the main goal. As such, we accept banks efforts to continuously manage the high cost of funding growth (time deposit). We also believe that at the current level, KBMI iV Bank LDR is still within our expectation and mode, more than enough to capture any loan demand in the following quarters of this year. Maintain our overweight call, with BBRI and BBNI as the picks.