BCA Licks Lips at Sight of Smaller Banks to Gobble Up
MARCH 30, 2015
Jakarta. Indonesia’s third largest lender by assets, Bank Central Asia, plans to acquire smaller banks, its chief said last week.
BCA president director Jahja Setiatmadja said the lender has its sights on banks under Buku I (Book I) classification, meaning banks with core capital of less than Rp 1 trillion ($764 million).
“We are eyeing to takeover small banks, the ones in Buku 1,” Jahja said. “Nothing has come to serious discussions as yet; it’s not easy to get a small banks that can walk side-by-side with us.”
Still, Jahja said BCA has reviewed financial reports of a number of small lenders as potential purchases. BCA is controlled by one of the richest conglomerates in Indonesia, Djarum, whose business holdings have spread from tobacco to plantations, property, finance, IT and other start-ups.
Banks focused on trade finance are particularly attractive to BCA, Jahja said.
Jahja said BCA has yet to propose any acquisitions or permit changes to the Financial Services Authority (OJK).
This year, BCA has set aside Rp 1.5 trillion for corporate action purposes, which could be used for making acquisitions or to develop the business of its subsidiaries.
BCA booked strong net income growth in 2014, thanks to growth in high yielding loans, but it expects to remain conservative in loan expansion this year, anticipating weak demand.
The lender booked Rp 16.5 trillion in net income, growing 16 percent from Rp 14.3 trillion in 2013.
This growth in profits outpaced most major lenders in Indonesia, but still marked a slower pace from BCA’s 22 percent increase in 2013.
The lender enjoyed strong growth in interest income, thanks to a relatively high net interest margin and strong loan growth. BCA booked a 6.5 percent NIM last year, up from 6.2 percent. Its total outstanding loans grew 11 percent to Rp 346.6 trillion last year, helped by strong growth of capital loans to corporations, including small and medium-size enterprise loans.
In retail banking, BCA has the biggest presence in terms of ATMs nationwide, as and as a result booked a 16 percent growth in fee-based income.
Jahja said has said the lender aims to see loans grow by between 12 percent and 15 percent this year.