What is correct in this situation?

Your choice is correct: you must allow the motorbike the right of way.

The key rule here is the priority-road signs. The yellow diamond means you are on a priority road, and the additional sign shows that the priority road bends to the left at the intersection. That means if you want to follow the priority road, your driving line goes left and vehicles coming from the right (the motorbike) are entering from a side road that must yield to you.

Even though you have priority, you still have to be careful: if the motorbike does not yield as required, you must brake and avoid a collision.