Bank Central Asia (BCA) to See Slower Credit Growth than State Banks
Bank Central Asia (BCA), one of the leading commercial banks in Indonesia, is estimated to continue posting growing net profit and rising credit growth in the years ahead despite the persistently sluggish domestic economy. However, contrary to the state-controlled banks - such as Bank Mandiri, Bank Negara Indonesia (BNI) and Bank Rakyat Indonesia (BRI) - BCA will most likely not see double-digit credit growth in the near future as BCA's customers mostly originate from the private sector. The state-controlled banks, on the other hand, have the advantage of being involved in the government's push for infrastructure development and government spending.
As the private sector is more vulnerable to the economic slowdown, credit growth of Bank Central Asia (BCA) is estimated at 8-9 percent (y/y) in 2016, whereas the state-controlled banks are estimated to see loan growth in the range of 13-15 percent (y/y). Enhanced government budget spending is expected to boost credit growth in 2016 and the government will encourage state-controlled banks to finance part of the various government-led infrastructure projects.
However, BCA has other strengths that support its performance. These are (1) the company's low cost of funds (which is the interest rate paid for the funds that BCA deploys in its business. The cost of funds is a key input costs for a financial institution as lower costs will generate better returns when the funds are deployed in the form of short-term and long-term loans to borrowers) and (2) its relatively high non-interest income (such as deposit and transaction fees, insufficient funds fees, annual fees, monthly account service charges, and inactivity fees). Last year, BCA's non-interest income was the highest among Indonesian banks except for Bank Mandiri. Relatively high non-interest income is important as less vulnerable to the central bank's interest rate policy.
Future Projection of Bank Central Asia's Financial Highlights:
| 2013 | 2014 | 2015F | 2016F | 2017F | |
| Net Interest Income | 25,009 | 30,611 | 35,293 | 39,464 | 44,187 |
| PPOP | 19,094 | 22,744 | 24,796 | 26,871 | 29,592 |
| Net Profit | 14,254 | 16,486 | 18,062 | 19,792 | 22,201 |
| P/E Ratio (x) | 23.1 | 19.8 | 18.3 | 16.7 | 14.9 |
| P/BV (x) | 5.2 | 4.2 | 3.7 | 3.1 | 2.6 |
in billion IDR rupiah, except otherwise indicated
¹ in IDR rupiah
Source: Danareksa Sekuritas