Introduction

Bank Central Asia (BBCA), one of Indonesia’s leading banking institutions, continues to demonstrate resilient earnings growth amid a volatile macroeconomic environment. PT Maybank Sekuritas Indonesia’s latest report provides a comprehensive analysis of BBCA’s performance, highlighting its robust liquidity, superior funding franchise, and strong asset quality. This article delves into the financial metrics, strategic initiatives, and ESG commitments shaping BBCA’s trajectory.

Key Highlights of BBCA’s Performance

Meeting Expectations with Strong Earnings Growth

BBCA’s FY24 net profit reached IDR54.8 trillion, marking a 12.7% year-on-year (YoY) growth. This surpassed both internal and consensus estimates, achieving 102% of Maybank’s FY24 projections. The growth was driven by an expansion in net interest margin (NIM) to 6.0% in Q4 2024, coupled with a 14.4% YoY increase in pre-provision operating profit. Despite a 49% YoY rise in provisions, credit costs remain manageable at 0.3%, reaffirming the bank’s robust asset quality.

Robust Loan Growth and Positive Profitability Outlook

Loan growth stood at an impressive 13.8% YoY, outpacing the estimated 11.0%. Key drivers included corporate loans (+15.7% YoY), SME loans (+14.8% YoY), and consumer loans (+12.4% YoY). For FY25, BBCA aims to reprice its loans to enhance profitability while projecting a loan growth guidance of 6-8% YoY. However, Maybank forecasts a higher growth rate of 9.0% YoY due to BBCA’s ample liquidity and low funding costs.

Superior Funding Franchise Driving Resiliency

BBCA’s ability to grow its margins during tightening credit conditions underscores its strong funding franchise. With a CASA ratio of 82.4% in FY24, BBCA maintains a low-cost funding base, enabling it to allocate resources to higher-yielding assets. This positions the bank favorably to navigate macroeconomic volatility.

Strategic Insights and Financial Metrics

Deposit Trends and NIM Expansion

Total deposits rose by 2.9% YoY in FY24, primarily driven by CASA growth (+4.4% YoY), while time deposits declined (-3.4% YoY). BBCA’s reluctance to join a time-deposit rate price war has kept its funding costs stable. The bank’s NIM expanded to 5.9% in Q4 2024 from 5.6% in Q4 2023, aided by higher leverage lending volume and lower funding costs. The consolidated NIM forecast for FY25/26 has been slightly raised to 6.4%.

Pre-Provision Operating Profit Efficiency

FY24 PPOP grew 14.4% YoY, driven by higher net interest income (+9.5% YoY) and non-interest income (+10.2% YoY). Operational efficiencies, particularly in digital and branch operations, limited operating expense growth to 2.2% YoY, reducing the cost-to-income ratio to 31.5% from 34.1% in FY23.

Healthy Asset Quality and Low Credit Costs

NPLs and loans at risk (LAR) improved to 1.8% and 5.3% in FY24 from 1.9% and 6.9% in FY23. Restructured loans represented only 3.2% of total loans, indicating limited downside risks. Credit costs are expected to remain low at 0.4% in FY25-26, slightly higher than management guidance of 0.3%, while NPL coverage remains robust at 209%.

Consistently High ROE

BBCA maintained a return on equity (ROE) of over 20% throughout FY24, with an average ROE forecast of 21% for FY25-26. This performance is attributed to strong asset quality, low funding costs, and stable credit costs, ensuring sustained profitability even in a tighter liquidity scenario.

Environmental, Social, and Governance (ESG) Commitments

Environmental Initiatives

BBCA finances environmentally friendly projects, with sustainable financing accounting for 25.4% of its total loan portfolio in FY22. The bank’s initiatives include carbon emission reductions, digital banking, and green building practices, achieving a carbon savings potential of 1,995 tCO2e.

Social Impact

With 62% of its workforce being female, BBCA emphasizes inclusivity. The bank collaborates with UNICEF, the Indonesia Red Cross, and WWF on CSR activities focusing on education, healthcare, and environmental conservation. In FY22, BBCA allocated IDR143.1 billion to community empowerment programs.

Governance Framework

BBCA’s governance structure includes a Board of Commissioners (BoC) and a Board of Directors (BoD) responsible for oversight and daily operations, respectively. In FY22, the BoD comprised 12 members, including two women. The bank has maintained transparency and avoided material regulatory issues over the past five years.

Recommendation

Maybank Sekuritas Indonesia reiterates a “BUY” rating on BBCA with a target price of IDR11,675, implying a 25% upside from the current share price of IDR9,350. BBCA’s strong funding franchise, resilient asset quality, and robust liquidity underpin its sustainable growth trajectory, making it a compelling investment opportunity.