Banking - Entering Q4-2024, performance improved in Oct24

Banking - Entering Q4-2024, performance improved in Oct24 Entering the 4Q24, the performance of several banks is starting to look promising. This is reflected in the bank profit as of Oct24, which grew higher compared to the end of the previous third quarter. For example, the profit of BBCA as of Oct24 which grew by 14.91% yoy. A similar growth occurred with BBNI, which recorded a profit growth of 4.28% yoy. BNI's President Director, Royke Tumilaar, also revealed that BNI is currently undergoing a transformation process. As a result, the growth engine in this bank with the 46 logo is considered not yet optimal, and the credit distribution remains conservative. Meanwhile, BCA President Director Jahja Setiaatmadja said that for 2025, the challenge in performance will be Third Party Funds. This is because, currently, interest rates are quite competitive, and all banks are chasing cheap funds. (Source : Kontan). Comment: We anticipate that our coverage banks will achieve ‘24F earnings growth in line with our and consensus forecasts. Notably, BBCA's consistent solid monthly performance suggests potential for better-than-expected net profit growth. The industry's key challenge remains deposit growth. Maintaining or surpassing YoY loan growth will be crucial for top-line expansion. NIM expansion is likely to continue, aided by a lower borrowing cost environment. However, intense competition for cheap funding and SRBI hot-selling will continue to pressure deposit growth. Non-II will act as a catalyst, and low CoC will further drive net profit growth. We maintain our Overweight stance on the banking sector, favoring BBCA and BMRI. For Syariah Banking, BRIS remains our preferred pick.