Following last year’s strong momentum, industry loan growth in Indonesia remained robust in Feb’24, increasing by 11.3% YoY (vs 10.4% YoY in Feb’23). Maybank IB said it maintains a POSITIVE view on the Indonesia banks sector and forecast 2024 industry loan growth of 10% YoY, in line with the central bank’s estimate of 10-12% YoY. Despite limited upside to the TPs, the house said it still likes: BBRI, BBCA and BRIS for exposure to Indonesia’s banking sector and recommend BUY on weakness.
Growth stable in all loan categories
Industry loan growth of 11.3% was driven by investment loans (12.1% YoY), working-capital loans (11.3% YoY) and consumer loans (9.3% YoY). Whilst most sectors grew, the growth was led by mining, business services and financial services. Meanwhile, loans to the construction sector remained flat in Feb’24, continuing its 4-month trend. Furthermore, the momentum in automobile (14.6% YoY) and mortgage (+13.1% YoY) lending was sustained, resulting in consumer loans growing steadily.
Deposit growth stable
Deposits rose 5.4% YoY in Feb’24, slightly lower compared to 5.8% in Jan’24. Growth was driven by both current account savings account (CASA) and time deposits at 5.3% YoY and 5.5% YoY, respectively. Although growth has slightly accelerated from 4Q23, deposit growth remained low compared to loan growth and this could lead to more intense funding competition. As a result, Maybank IB said it expects funding cost to increase in 1H24 and pressure margins.
Liquidity more than sufficient
Liquidity remains healthy as the industry’s liquid asset-to-deposit ratio was at 27.4% in Feb’24. Additionally, funding liquidity is also adequate, with LDR at 84.0% in Feb‘24, while the capital adequacy ratio (CAR) was 27.5% in Jan’24. The house believes these levels are adequate to achieve loan growth expectation for this year of 10% YoY.
