Banking - Unemployed Credit Piles Up Even Though Banking Credit Grows High

Banking - Unemployed Credit Piles Up Even Though Banking Credit Grows High A number of banks are still piling up idle credits, even though their average credit growth increased by double digits in the first semester of 2024. Take, for example, Bank Mandiri, which recorded credit growth of 20.5% yoy in the first semester of 2024, reaching IDR1,532.35 tn. However, Bank Mandiri's idle credit is still quite large, even increasing annually in line with growing credit. Bank Mandiri recorded that total idle credit reached IDR240.21 tn in semester I-2024, up 6.43% yoy from the same period last year of IDR225.69 tn. Not only Bank Mandiri, Bank Central Asia also recorded a larger total idle credit, namely IDR413 tn in 1H24, up 13.15% yoy from the same period last year of IDR365 tn. The increase in idle credit is in line with BCA's credit growth of 15.5% yoy in semester I-2024, reaching IDR850 tn. EVP Corporate and Social Responsibility at BCA, Hera F. Haryn, said undisbursed financing at BCA as of June 2024 came from various segments; this is in line with the business sector that drives BCA credit growth in Semester I-2024, which comes from the financial services sector, non-oil and gas mining, to transportation and logistics. On the other hand, banks in the KBMI 3 ranks also recorded high levels of unemployed credit, such as Bank Permata. This bank recorded total idle credit of IDR117.34 tn in 1H24, up 29.71% yoy from last year's period of IDR90.46 tn. (Source : Kontan) Comment : We believe the increasing undisbursed loan is acceptable amid the uncertainty situation and thus made several debtors wait and see stance to continue. We believe once the domestic and global concern softer, undisbursed loans are likely to sharply decline. Maintain an overweight stance in the banking sector with BBRI and BBNI as the picks.