Banking - Bank lending to the sustainable sector is increasing rapidly

Banking - Bank lending to the sustainable sector is increasing rapidly Lending to sustainable and green sectors, including those focused on Environmental, Social, and Governance (ESG) initiatives, is growing significantly among Indonesian banks. Several major banks, including BCA, CIMB Niaga, and Bank Danamon, have reported a rapid increase in their sustainable financing portfolios in the first half of 2025. Bank Central Asia (BBCA)’s credit disbursement to sustainable sectors grew by 21.1% yoy to reach IDR239.7 tn by the first half of 2025. This amount constitutes 24.9% of the bank's total financing portfolio. Bank CIMB Niaga's total credit and financing for the ESG sector reached IDR57.6 tn as of June 2025, showing a 2.1% yoy growth. This represents nearly 25% of the bank's total credit portfolio. Bank Danamon Indonesia's lending to the green and sustainable sectors is also growing positively. (Source : Kontan) Comment : The overall increase in sustainable lending is being driven by a combination of factors, including government regulations, growing awareness among businesses, and a commitment from the financial institutions themselves to support Indonesia's sustainable development and energy transition goals. The trend indicates that sustainable finance is moving from a niche market to a mainstream component of the Indonesian banking sector. It suggests a future where economic growth and environmental stewardship are increasingly intertwined. Yet on the other hand we believe total loan will likely remain below double digit due to the prolonged uncertainty. In all we expect working capital and / or investment loan could offset the pressure on consumer loan. Maintain OW for the sector with stock pick pecking order BBCA > BMRI > BRIS.