Banking - Third-party fund increased by 6.3% yoy in Nov24

Banking - Third-party fund increased by 6.3% yoy in Nov24 Bank Indonesia (BI) reported that third-party funds (DPK) in Nov24 amounted to IDR8,534.8 tn, an increase of 6.3% yoy. The development of DPK was influenced by a 15.2% yoy growth in Corporate DPK, reaching IDR4,012.6 tn. Meanwhile, individual DPK contracted by 1.1% yoy to IDR4,059.2 tn. In Nov24, demand deposits grew by 8.4% yoy to IDR2,605.9 tn, after growing by 5.5% yoy in the previous month to IDR2,530.4 tn. Savings grew by 6.6% yoy to IDR2,804.4 tn, after growing by 7.5% yoy in the previous month, Oct24, to IDR2,795.7 tn. Similarly, time deposits grew by 4.3% yoy to IDR3,124.5 tn, after growing by 5.2% yoy in Oct24 to IDR3,137.9 tn. Meanwhile, deposit interest rates tend to decline in Nov24. The interest rates on time deposits decreased for tenors of 1 month, 12 months, and 24 months, respectively by 4.73%, 5.74%, and 4.28%, after being recorded at 4.75%, 5.92%, and 4.29% in Oct24. On the other hand, the interest rate on 3-month deposits remained relatively stable at 5.53%, and the 6-month tenor in Nov24 was 5.68%, an increase compared to the previous month at 5.58%. (Source : Kontan) Comment : Amid the tight liquidity environment, these developments indicate a dynamic shift in the deposit landscape, with corporate deposits playing a significant role in overall DPK growth. The mixed trend in deposit interest rates reflects the ongoing adjustments in the banking sector. Our primary concern is the persistent allure of SRBI yields, which poses a consistent headwind to a better TPF growth in the following periods. Despite this challenge, we maintain a favorable outlook on the banking sector, underpinned by a robust balance sheet composition characterized by a substantial allocation to marketable securities. This underscores the sector's robust intermediary function. We remain overweight on the banking sector. Our analysis highlights BBCA and BMRI as preferred choices within the conventional banking space, while BRIS emerges as a compelling option within the Syariah banking landscape.