Steady Loan Growth Amidst External Headwinds
Key Takeaways:
▪️The national banking system sustained robust loan expansion, 12.4% YoY increase in Mar-24. TPF commonly experienced a 7.4% YoY uptick, driven mainly by the growth in demand deposits. These dynamics resulted in a LDR position of 84.2%. NIM stood at 4.6% in Mar-24 (vs 4.5% in Feb-24).
▪️Recent declines in banking stocks, notably among the Big 4 banks are driven by factors including cautious Fed actions boosting UST yields, disappointing 1Q24 financial results, and revised expectations for 2Q24. However, despite BI's rate hike, banks are confident about NIM enhancement through CASA improvement, making now a favorable time to gradually accumulate in bank stocks considering banks as one of the defensive options.
▪️BBCA demonstrates strong growth with significant increases in NPAT and other key metrics, while BBRI faces challenges with higher CoC and NPL, BMRI experiences marginal profit growth but QoQ decrease, BBNI shows modest growth amidst declining NII/PPOP, anticipating a moderate earnings growth of 11%-12% in FY24E with stable to slightly pressured NIM.
▪️We maintain our Overweight rating for the banking sector amidst rising benchmark rates and higher credit cost. We continue to like BBCA & BRIS, benefiting from strong growth outlook, improving asset quality, and steady NIM. Risk to our call: 1) slower-than- expected economic recovery; 2) rising NPL; 3) unexpected hike in the BI rate.
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