BBNI recently announced its 4Q24 result. BBNI’s 4Q24 earnings weakened with net profit declining to IDR 5.2tn (-8% QoQ). Loan growth is expected to moderate to 8–10% in 2025 amid tightened liquidity, with LDR exceeding 95%, while NIM is projected to compress further to 4.0%–4.2%.

Management has guided for slower loan growth in 2025 at 8 - 10% from 11.6% in2024. The slower growth projection reflects the tightened liquidity conditions and persistently high funding cost.
 
This tight liquidity situation is certainly notgood for all banks in general. However, Indonesia is at the chance of getting more liquidity this year through The new Export Proceeds Regulation (DHE).

Beginning in 2025, exporters will be required to retain 100% of their foreign earnings domestically for a year. This measure is anticipated to inject USD 90bn into the financial system.

Should the regulation successfully bolster Indonesia's international foreign exchange reserves, it could lead to a sovereign credit rating upgrade by a U.S.-based rating agency this year. The resulting liquidity influx, equivalent to 16% of third-party banking funds, is expected to strengthen the rupiah to IDR 15,100/USD and lower 10-year bond yields to 5.5% by the end of the year.
   
Aside from those catalysts, there has been good signs of reversal and relieve for JCI. For one, DXY has already took a sharp downturn from its high of 110 in early January.

This weaker DXY has managed to help Rupiah to perform better with Rupiah currently trading at c. IDR 16,100 per USD.
There's also BI’s proactive measures which includes an additional Rp250tn in government bond purchases which are anticipated to stabilize the bond market while supporting loan growth of 15%. We expect this to lay a solid foundation for GDP growth to rise to 5.3% in 2025.

All things considered, we believe that Indonesia market has a great chance to perform better going forward on the back of solid macro backdrop. However, we urge investors to pay attention on the development and the execution of the new export proceed regulation as it may boost Indonesia's liquidity greatly.