Banking - Apr25 consumer loan slows down, vehicle financing weakest

Banking - Apr25 consumer loan slows down, vehicle financing weakest The weakening purchasing power of the public is reflected in the slowing performance of consumption credit as of April 2025. Bank Indonesia (BI) recorded a yoy growth in consumer credit of 8.9%, reaching IDR2,238.3 tn in the fourth month of this year. The realization was lower compared to the 9.2% yoy growth in the previous month, marking the lowest since the beginning of the year. The slowdown occurred in all types of consumer credit, namely motor vehicle credit (KKB), home ownership credit (KPR), and multipurpose credit. The growth of KKB in April 2025 was recorded at 4.3% yoy with a total credit disbursement of IDR143.7 tn. This figure decreased from a 6% yoy growth and a credit value of IDR144.9 tn in the previous month. Meanwhile, the growth rate of mortgages also slowed from 8.9% yoy to 8.5% yoy in April 2025, with a total financing disbursed amounting to IDR806.9 tn. A slight slowdown occurred in the multipurpose credit component, which grew by 9.6% yoy to IDR1,287.7 tn in April 2025. (Source : Bisnis Indonesia). Comment : Looking forward, the trajectory of consumption credit will be a key indicator of Indonesia's domestic demand resilience and overall economic momentum. Crucially, industry loan demand figures for May-June 2025 will be instrumental in gaining a clearer perspective on the projected earnings growth of banks for FY25. Furthermore, upcoming key economic data releases and the May 2025 bank-specific earnings growth will offer additional insights into the potential for major banks to achieve their FY25 growth targets and key performance indicators. For FY25 earnings, the interplay of softer funding costs and consistent loan growth will be vital in offsetting the impact of potentially earlier-than-anticipated lower yields this year. While the recent benchmark rate cut is likely to exert its influence starting in the fourth quarter of 2025, we anticipate that non-interest income, the cost-to-income ratio, and particularly credit costs will play a more significant role than topline growth in determining this year's earnings expansion. We maintain our Overweight (OW) stance on the banking sector, with BRIS>BBCA>BMRI remaining as our preferred selections