Check out what makes Danamon more susceptible to funding competition

Its CASA portion is one of the lowest.

According to Maybank Kim Eng, one year after the more prudent higher downpayment requirement for automotive financing came into effect, Danamon’s multifinance arm, Adira, is facing new pressure from increased fuel price.

Here's more from Maybank Kim Eng:

This could be a further drag on the motorcycle segment and lower earnings contribution for Danamon. Note that Adira’s performance was notably inferior compared with domestic peers since implementation of higher downpayment requirement for sharia business in early 2013.

Danamon’s high LDR and weak deposit base makes it more susceptible to funding competition given recent and upcoming BI rate increases. By rule, banks can only offer 50bp premium in time deposit rates over the applied reference rates.

Danamon already has the highest CoF among peers, but its CASA portion and market share are still one of the lowest. With interest rates differential among market leaders narrowing, Danamon is only likely to achieve 10% deposit growth in FY13.

Above all, the uncertainty of a DBS buyout has created a share price overhang. The takeover is pending Bank Indonesia’s approval for DBS to own more than 40% of Danamon.

Such approval, which is subject to MAS agrees on a reciprocity clause required by BI, could be a potential stumbling block for the proposed deal.