Bank - Signs of a decline in banking credit interest rates starting to appear in early 2025

Bank - Signs of a decline in banking credit interest rates starting to appear in early 2025 At the beginning of 2025, banks still seem to struggle to lower credit interest rates. However, there have been small changes in the Basic Credit Rate (SBDK) set at the beginning of this year. For example, Bank Central Asia (BBCA) shows a decrease in SBDK for several segments. Among them, the non-SME retail credit segment and the SME credit segment for micro. For non-SME retail credit as of December 31, 2024, the SBDK set by BBCA is at the level of 8.30%, down from the previous month's level of 8.31%. Meanwhile, microcredit is at the level of 8.22%, down from the previous month's level of 8.23%. Meanwhile, there is also Bank CIMB Niaga, which appears to have made a reduction in SBDK. The decrease in SBDK is evident in the KPR segment, which as of December 31, 2024, is at the level of 8.11%. For comparison, as of October 31, 2024, the SBDK CIMB Niaga for the KPR segment was at the level of 8.17%. Next, in the period ending November 31, 2024, the SBDK in that segment also decreased again to 8.15%. (Source : Kontan) Comment : While a 25bps reduction in the benchmark rate may not be sufficient to induce substantial downward adjustments to lending yields across all banks, we anticipate a measured response. Recent developments suggest a gradual transmission of the lower benchmark interest rate to lending rates, albeit with varying degrees across institutions and loan categories. Competitive pressures, funding costs, and varying credit risk assessments are likely to influence the pace and extent of these adjustments. We believe that further benchmark rate cuts will facilitate a more pronounced decline in lending yields, notwithstanding the potential impact of a less accommodative Federal Reserve policy. Maintaining an overweight position in the banking sector remains our preferred strategy, with BBCA and BMRIas our preferred picks. Within the Islamic banking segment, BRIS stands out as our favored choice.