Automotive - Motor vehicle loan disbursement accelerates in 1H25

Automotive - Motor vehicle loan disbursement accelerates in 1H25 Motor vehicle loan (KKB) disbursements are seeing robust growth in the first half of 2025. Bank Indonesia (BI) data shows KKB industry growth at 5.5% yoy in June 2025, reaching a national total of IDR145.0 tn, up from IDR137.6 tn in June 2024. Leading this acceleration, Bank Syariah Indonesia (BRIS) reported double-digit growth in its motor vehicle financing business for 1H25, outperforming the broader industry. CIMB Niaga Auto Finance (CNAF) also experienced strong KKB growth, primarily driven by financing for both new and used four-wheeled vehicles. While first-half figures aren't yet available, Bank Central Asia (BBCA) recorded a significant 12.3% yoy KKB disbursement growth as of March 2025, totaling IDR67.1 tn. (Source : Kontan) Comment : The acceleration in motor vehicle loan (KKB) disbursement observed in H1 2025 is expected to face mixed conditions in the second half of the year, in our view. Factors supporting growth: (1) auto event series are anticipated to stimulate vehicle purchases and, consequently, financing, (2) continuing incentives for EVs could underpinned steady demand (our expectation mainly on 2W), especially for BEV and HEV segment, (3) cross-selling and various bank strategy, coupled with (4) dealer massive promotions. Potential headwinds: (1) sluggish overall vehicle sales on a cautious consumer environment and wait and see stance, (2) softening purchasing power, which could temper demand, (3) tightening lending standards and carefully loan application approval on npl hickup anticipation in 2H25, (4) global economic uncertainties. To sum up, while specific segments like EV financing show strong momentum and banks are actively pursuing growth, the broader KKB market in 2H25 may experience slower growth compared to the robust 1H performance if consumer purchasing power remains subdued and banks tighten lending standards in response to macroeconomic conditions. The impact of automotive events and stable macroeconomic conditions will be crucial in determining the actual trajectory.