Peek at Stock Recommendations of Banking Issuers Amid Economic Recovery

Reporter: Aerospace Wisdom | Editor: Anna Suci Perwitasari

KONTAN.CO.ID – JAKARTA. The shares of listed banking companies are believed to be prospective throughout this year. The economic recovery factor will boost the performance of the banking sector.

Mirae Asset Sekuritas analyst Handiman Soetoyo in his research on November 29, 2021 wrote, in 2022 the recovery in economic activity will encourage credit growth to 10.2%. According to him, the telecommunications, manufacturing and commodity-related sectors will be the main factors driving credit growth this year.

He also saw that liquidity this year will still be abundant, continuing the trend that occurred last year. In addition, the banking sector will also record improvements in asset quality. Handiman assessed that recently the quality improvement has been going on as reflected in the Non Performing Loan (NPL) of the banking industry which is already at 3.19% as of September 2021, after reaching its peak at the level of 3.31% in July 2021.

“We see that asset quality improvements should continue this year. In addition, with the improvement in the economy, the total restructured loans will also decrease and lead to lower provision fees,” Handiman wrote in the research quoted by Kontan.co.id.

Also Read: A Number of Property Issuers Are Preparing to Cut the Blessings of the Home DTP VAT Extension

BRI analyst Danareksa Sekuritas Eka Savitri in his research on November 23, 2021, wrote that with the loosening of social restrictions, as well as the gradual recovery of economic activity, in 2022 it is projected that credit demand will increase.

According to him, the banks are ready as they have abundant liquidity. On the one hand, banks are still able to maintain Cost of Fund (CoF) they are in the midst of falling interest rates on time deposits and low exposure to time deposit instruments.

“Taking into account these factors, as well as the potential for an increase in the benchmark interest rate of up to 50 bps to 4.0%, we project credit growth in 2022 of 7.1% on a global basis. year on year (yoy).

In terms of performance, Eka projects the banking sector’s net profit this year to grow to 23.9 percent. The driving factor is the increase in NIM to 5.6%, the increase in CoF by 8 bps to 2.3% in line with abundant liquidity.

In addition, banking operating costs will grow 5.3% yoy which makes Cost-to-Income Ratio (CIR) to 44%. As well, the lower credit cost as much as 201bps because most banks have made backups front loading in 2020-2021 ago.