Customers at a Bank Central Asia ATM center in Jakarta. (B1 Photo/Mohammad Defrizal)

BCA's Q1 Result Lends Solid Footing as Bank Restructures Loans to Help Businesses


MAY 28, 2020

Jakarta. Bank Central Asia, or BCA, Indonesia's largest lender by market capitalization, has restructured up to $5.6 billion in customer loans, or 4 percent of the lender's total loan portfolio, and said it expected the figure to double in the coming months as the Covid-19 pandemic continues to weaken the economy. 

Large-scale social restrictions (PSBB) to rein in pandemic have hit the economy hard with many companies reporting drastically reduced revenues. Many of them are now at risk of failing to pay back their bank loans. 

BCA President Director Jahja Setiaatmadja said the lender has restructured a total of Rp 65 trillion–Rp 82.6 trillion ($4.4 billion–$5.6 billion) in loans, equivalent to 10 percent–14 percent of its total loan portfolio so far this year. 

Around 72,000 customers, or 10 percent of BCA's borrowers from all segments, have signed up for the bank's loan restructuring program, Jahja said. 

"The number might increase in the next few months to around 20 percent–30 percent of our total loans, or 250,000–300,000 debtors," Jahja said on Wednesday. 

The lender's loan restructuring program was launched as a response to a government call for banks to help businesses resume their activities amid the pandemic. 

The government is providing Rp 88 trillion through the country's biggest lenders for restructuring loans for small and medium enterprises under the so-called National Economic Recovery program.

The lenders would serve as anchor banks to channel the government funding to other smaller-sized banks who will use the money to restructure customer loans. 

Jahja did not say whether the government has signed BCA up for the program but indicated the lender is now in stable condition with plenty of liquidity.  

"Our liquidity position remains strong with a loan-to-deposit ratio of 77.6 percent. We haven't needed to issue bonds or rights issues. Our loan growth has also weakened a little," Jahja said.

Strong First Quarter

BCA booked Rp 6.6 trillion in net income in the first quarter of this year, up 8.6 percent from the same period last year as the lender's loan portfolio and its customers' current and saving accounts – cheaper sources of funds compared to time deposit accounts – continue to grow. 

The lender's loan portfolio grew 12.3 percent to Rp 612 trillion, with credit to corporate clients growing fastest by 25 percent to Rp 250 trillion, or 41 percent of the total loan. 

BCA's current and saving accounts also expanded 17 percent to Rp 569 trillion – 77 percent of the lender's third-party funds. 

The number of bad loans at BCA remains at 1.6 percent of its total loan portfolio, still below the 5 percent cap set by the Financial Services Authority (OJK).

But, the lender has doubled its bad loan provision in anticipation of weakening credit quality. 

BCA also reported a 15.6 percent return of equity, down from last year's 16.4 percent, but still confirming the bank as one of the most profitable lenders in Indonesia.