Banking - Bank credit to the mining sector flows heavily in 2024

Banking - Bank credit to the mining sector flows heavily in 2024 The mining and coal sector remains a lucrative field for banking. This is evident from the substantial flow of credit into the mining sector in 2024. Take the example of Bank Central Asia (BBCA), which recorded significant credit growth in the mining sector, contributing to a 15.7% yoy increase in credit in 2024. If we look at the consolidated financial statements, BBCA's total credit to the mining sector amounted to IDR26.62 tn as of December 31, 2024, an increase of 72.5% yoy compared to the previous period of IDR15.43 tn. Bank Mandiri (BMRI) also recorded significant credit growth to the mining manufacturing sector in 2024, growing 56% yoy to IDR21.5 tn compared to IDR7.7 tn in the previous year, 2023. Bank Negara Indonesia (BBNI) recorded credit disbursement to the mining sector amounting to IDR31.98 tn in 2024, or approximately 4.2% of BBNI's total bank-only credit. Increased from the portion in 2023, which was IDR26.14 tn, or about 3.8% of BBNI's total bank-only credit. (Source : Kontan). Comment : The sector's overall growth trajectory remains positive, promising continued momentum for total loan growth. Our forecasts for the banks under our coverage this year hinge on a significant contribution from corporate lending. This aligns with our broader outlook for the banking sector, where we anticipate growth within the 10%-11% range (as stated in our Dec24 and Jan25 report), driven primarily by the corporate segment. We maintain our overweight stance on the sector, with BBCA and BMRI as our preferred picks. Within the Islamic finance landscape, BRIS remains our top selection.