Banking - How the Banking sector maintains CoC amid market uncertainty

Banking - How the Banking sector maintains CoC amid market uncertainty The effect of President Donald Trump's policies has heightened banks' concerns about maintaining the quality of their credit. The reason is that export demand to the United States could decrease, ultimately disrupting the cash flow of exporters. In general, the trend of Gross NPL in banking has indeed been declining. As of January 2025, the banking sector's Gross NPL is at 2.18%. Compared to the previous month, the banking sector's gross NPL remains at 2.08%. Meanwhile, if we look at it sectorally, the wholesale and retail trade sector, which also engages in a lot of exports, has a worsening NPL trend. As of January 2025, the NPL for that sector was at 3.61%. For comparison, in December 2024, its NPL was at 3.29% and in January 2024, it was at 3.55%. (Source : Kontan) Comment : In conclusion, the Indonesian banking sector appears to be taking the potential impact of global economic uncertainties, particularly those related to US trade policies, seriously. They are employing a range of strategies, including proactive risk assessments, enhanced credit analysis, portfolio diversification, and increased provisioning, to maintain the quality of their credit portfolios. The worsening NPL trend in the export-oriented wholesale and retail trade sector highlights the importance and timeliness of these measures. Maintain OW stance for banking sector with BBCA and BMRI as our pick and BRIS as our pick within sthe banking syariah.