Banking - LAR has the potential to increase

Banking - LAR has the potential to increase The potential for banking credit quality to deteriorate is a challenge this year. In this case, the loan at risk (LAR) is estimated to have the potential to rise again. This is slightly reflected in data from the Financial Services Authority (OJK), which recorded that the LAR ratio showed an increase to 11.6% in January 2024. This position is up from the position in December 2023, which was at 10.94%. (Source : Kontan). Comment : LAR has been consistently declining, and we think a higher figure approaching the end of the relaxation period is acceptable. All in all, we believe that after the fully lifted restructured credit in May, banks under our coverage will continue in good shape. Maintain our OW stance on the banking sector, with BBRI and BBNI as the top picks.