[Updated at 02:42 p.m.on Tuesday, Feb 9, 2021, to add analyst's comments]

Jakarta. Bank Central Asia, Indonesia's largest lender by market capitalization, has booked a consolidated net income close to $2 billion last year, placing it as the bank with the highest profit in 2020. 

The lender, also known as BCA, posted Rp 27.1 trillion ($1.95 billion) in consolidated net income last year, or down 5 percent from a year earlier, as its loan contracted 2.5 percent to Rp 588.7 trillion due to weak demand from individual customers and businesses during the Covid-19 pandemic. 

Still, the $62-billion bank fared much better than its closest rival in facing the pandemic disruptions. State-controlled Bank Rakyat Indonesia (BRI), the country's largest lender by asset, booked Rp 18.7 trillion in net income last year, down 46 percent from Rp 34.4 trillion in 2019.

BRI's sister company Bank Mandiri, Indonesia's second-largest lender by assets, also saw its consolidated net income declined 38 percent to Rp 17.12 trillion from Rp Rp 27.4 trillion. State-controlled Bank Negara Indonesia (BNI), whose Rp 891 trillion assets placed it as the fourth-largest lender in the country, had to contend with a net income of Rp 3.3 trillion last year, 79 percent smaller than it was in 2019. BCA, BRI, Mandiri, and BNI booked the most profit in 2019. 

Jahja Setiaatmadja, BCA's president director, said like the other banks, BCA had to set aside a higher amount of provision to anticipate the potential decline in asset quality.

Indonesia's banking regulator requires all lenders to set aside a certain amount of money from their equity to provide cover for loans that were behind in the payment. Banks usually do this using funds that otherwise ended up in retained earnings in their balance sheet, therefore reducing the net income. 

"In 2020, in general, we know that profits have decreased by 5 percent. We are better than others, but we must admit that we have also fallen," Jahja said in a press conference on Monday. 

BCA's net interest income, which derives from the difference between the interest that the lender charges to its borrowers and the one it paid to savers, increased 7.3 percent to Rp 54.5 trillion from a year earlier. 

The lender also reported that net inter non-interest income, which includes various fees the lender charged to its customers, decreased slightly by 0.5 percent to Rp 20.2 trillion.

Income from the two sources boosted BCA's operating income to Rp 74.8 trillion in 2020, up 5.1 percent from 2019. On the other hand, operating expenses were down to Rp 29.3 trillion, or 3.1 percent lower than in 2019, due to partially obstructed operations during the pandemic.

Jahja said that BCA's pre-provision operating profit (PPOP) had actually increased 11.2 percent to Rp 45.4 trillion, providing an adequate buffer to cover future bad debts. Throughout 2020, BCA had to increase its provision by 152 percent to Rp 11.6 trillion. 

"Actually, it was more profitable for banks right now to avoid disbursing credit," Jahja said.

But BCA is committed to keeping expanding its loans, he said, in line with the calls from President Joko "Jokowi" Widodo and Bank Indonesia, the country's central bank, to help the economy recover. 

"So if you asked why we keep handing out loans, that's because we are prudent, and our target is loan [expansion]," Jahja said. 

BCA share opened at Rp 35.000 apiece in the trade at Indonesia Stock Exchange on Tuesday, 1.3 percent higher than its closing price a day earlier, following the news.

Still, analysts said BCA's stellar performance should not encourage investors to stock up on BCA's shares. 

On Tuesday, BRI Danareska Sekuritas downgraded its recommendation to "hold" from "buy" in January but keep its price target for BCA shares unchanged at Rp 38,000 apiece, or about 4.7 times its estimated book value for this year. 

"Although it managed to cut cost-of-fund by 51 basis points to 1.4 percent last year, we are convinced that BCA had a limited room to cut the cost further, especially with Bank Indonesia being expected to cut its benchmark interest further by 25 bps," BRI Danareska said in a research notes to clients on Tuesday. 

Bank Indonesia set the seven-day reverse repo rate at 3.75 percent for the third straight month in January, keeping it at the lowest level since the benchmark first introduced in 2016.