Banking - Banks record increasing motor vehicle loans

Banking - Banks record increasing motor vehicle loans Despite the fact that the automotive industry is currently still facing various challenges, several banks recorded continued automotive loan growth. Bank Central Asia (BBCA) recorded that KKB per quarter in 2024 grew 22.2% year over year to IDR59.8 tn. According to BBCA President Director, the main driver for the stronger demand is Ramadan and Eid al-Fitr 2024 momentum, which had a positive impact on the bank credit distribution as of March 24. Apart from that, BCA Exposary was also overall helpful for solid growth in 1Q24. Another bank that showed robust growth is Bank Syariah Indonesia (BRIS), whereas in the period of February 24, vehicle financing at BRIS reached a portfolio of IDR4.4 tn, or an increase of 48.3% year over year. (Source: Kontan) Comment : The automotive loan, which is categorized as a consumer loan segment, is a price-sensitive, and hence, continuing growth in that segment should be translated as a solid achievement. We expect total 2W and 4W sales this year to arrive within a similar figure with FY23 and thus could impact positively the ‘24F automotive loan growth, ceteris paribus. Our expectation on a softer auto loan yield is under the assumption of the end of rising benchmark rate transmission and stiffer competition. We believe automotive segment loans will significantly contribute to overall total loan growth. Maintain our OW stance on the sector, with BBRI and BBNI as our top picks.