Banking - TPF softened, BI optimistic banking liquidity hasn’t tightened

Banking - TPF softened, BI optimistic banking liquidity hasn’t tightened Banking Third Party Funds (TPF) continue to grow soft. However, Bank Indonesia (BI) is optimistic that banking liquidity has not tightened. As of Nov’23, banking deposit growth reached 3.04% yoy, or softened compared to the growth in previous month of 3.43% yoy. BI optimism was reflected in the Ratio of Liquid Assets to Third Party Funds (AL/DPK) which remain high at 26.04%. According to BI, the development of liquidity had also show positive impact on banking interest rates, whereas 1M deposit interest rate and credit interest rate in Nov23 recorded at 4.46% and 9.29% respectively. (Source: Kontan) Comment: We expect TPF will grow much stronger, which will be driven mainly by our expectation on softened inflation. CA will remain grow higher than SA, while TD likely to steady as we expect lower rate could occur in ‘24F. Higher UMP would not caused SA to increase massively. Yet at some point should make positive impact. As such we believe ‘24 baking sector liquidity likely to remain adequate to capture stable loan demand growth.