Banks: Potentially less-than-anticipated liquidity boost from the revised DHE policy (NEUTRAL)

Stock Code	Last Price	Change	Change %
DSSA	44.950	2.700	6,39%
DCII	169.200	2.250	1,35%
MFIN	5.400	800	17,39%
RDTX	12.450	700	5,96%
PTRO	2.910	460	18,78%
MKPI	25.200	450	1,82%
CUAN	7.325	350	5,02%
RATU	5.700	300	5,56%

Banks

Potentially less-than-anticipated liquidity boost from the revised DHE policy

Given the more relaxed structure vs the previous DHE policy, the impact on USD supply may be lower than initially expected.
BMRI has the highest loan portion from the mining sector, which indicates it could benefit more from the revisions.
Maintain Neutral rating on the sector with BBCA as our top pick, followed by BTPS and BRIS given their better liquidity and NPL outlooks.

New regulation regarding DHE

The government issued Government Regulation No. 8 of 2025 to revise Regulation No. 36 of 2023 to enhance the management of export proceeds (Devisa Hasil Ekspor/DHE) from natural resources. In the new regulation. exporters must retain 100% of DHE for 12 months in Indonesia’s financial system for mining (excluding oil & gas), plantations, forestry, and fisheries. For oil and gas mining, the retention requirement is 30% for 3 months. These requirements will be deducted if the DHE are used for: 1) conversion to Rupiah, 2) payment in foreign currency for government-related obligations, 3) payment of dividends in foreign currency, 4) working capital in foreign currency, and 5) repayment of forex loans.

Uncertainties regarding the net impact

Given the more relaxed structure compared to the previous policy, the impact from the latest DHE policy on USD supply may be lower than initially expected, despite the extended holding period from 3 to 12 months and the retention requirement increasing from 30% to 100%. BI and the banks have yet to give detailed impact from the revisions as these depend on the exporters’ behaviors. However, we believe the agriculture-related sector could use the exemption more as most of the costs are mostly Rupiah-denominated, compared to the mining-related.

Potential impact on SOE banks

As of FY24, the SOE banks have similar exposure from the current implementation of DHE regulations with 2.5-2.7% of their TPFs are DHE-related. We note that BBRI has the highest loan portion from the agriculture sector, while BMRI has the highest loan portion from the mining sector, which indicates the latter could benefit more from the revisions. BBNI also stands to benefit more as it has the least agriculture loans and the second highest mining loans.

Maintain Neutral, with BBCA remaining as our top pick

We continue to favor BBCA, BTPS, and BRIS, despite their outperformance over peers, due to their higher liquidity and stronger asset quality outlooks. We expect AGMs and 1Q25 results in Mar-Apr25 to remain overhang in the short term, in addition to domestic and global macro uncertainties. Key risks to our view include stronger Rupiah, liquidity, and asset quality.

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