Banking - Tight liquidity not resolved yet, deposit rates have already dropped

Banking - Tight liquidity not resolved yet, deposit rates have already dropped While the liquidity problem has not been resolved, the banking sector has actually recorded a trend of decreasing deposit interest rates.Whereas, this could lead to a decrease in the public's interest in saving their money in banks. If we refer to data from Bank Indonesia (BI), the interest rates on bank deposits are indeed showing a downward trend for several tenors.For example, for a 12-month tenor, the deposit interest rate in March 2025 is at 5.07%, down from 5.17% in December 2024. Quoting the BI interest rate transmission assessment, it is mentioned that the condition reflects the transmission of the BI-Rate policy interest rate reduction to fund interest rates.The prediction is that the prospect of a decline in fund interest rates is expected to continue in line with the expectation of a global interest rate decrease. (Source : Kontan) Comment : It's interesting to see how the banking sector is responding to the tight liquidity situation and the potential for global interest rate cuts, even though the underlying issue of tight liquidity hasn't been fully resolved, deposit interest rates are already on a downward trend. The key takeaway seems to be that while liquidity remains a concern, the anticipation of global interest rate easing is already impacting deposit rates in Indonesia. This could indeed affect the public's incentive to save in banks, making the growth of third-party funds something to watch closely. Maintain our OW stance for banking sector with BBCA, BMRI and BRIS as our picks.