Banking - TPF are threatened to move to SBN

Banking - TPF are threatened to move to SBN The banking sector is currently facing a liquidity scramble in the market. This condition causes the interest burden to remain high even though the benchmark interest rate has decreased. How could it not be, when banks are faced with investment instruments that offer higher yields? For example, the State Securities Instrument (SBN) offers higher interest rates compared to bank deposits. As of Feb25, the yield on SBN for both 2-year and 10-year tenors remains above 6%. Meanwhile, the deposit interest rate for a 2-year tenor remains around 4% based on BI data as of January 2025. On the other hand, Third Party Funds (DPK) from individual banking decreased by about 2.6% yoy. Although the exact flow is not known, individual ownership in SBN increased by 25.79% yoy to IDR576.92 tn. (Source : Kontan). Comment : The higher returns offered by SBNs are creating a competitive environment for banks, leading to a potential shift of customer funds and posing challenges to their liquidity and profitability. Banks are actively addressing this issue, but the situation requires careful monitoring and strategic responses. Maintain our overweight stance for banking with BBCA, BMRI as our pick and BRIS as our picks in Syariah banking landscape.