Private lender Bank Central Asia (BCA) says that ongoing sluggish economic conditions have impacted its business in the first quarter as the latest data suggests a slowdown in lending growth.

Speaking after the bank'€™s annual general shareholders'€™ meeting on Thursday, BCA president director Jahja Setiaatmadja said that its loan growth rate in the first three months of the year seemed to be lower than the rate posted during the same period in 2014.

'€œI met with our clients and their businesses appear to be flagging, including those who run supporting businesses in property. They told me that their sales had declined by 30 percent so far,'€ he said.

BCA sees the situation as being seasonal, as business is usually slow at the beginning of the year.

'€œBut it may also have something to do with state or regional budget funds that have not been optimally disbursed, so we lack economic push. Our own data shows that applications for working capital loans have dropped,'€ he said.

Jahja, however, did not provide details on this year'€™s first-quarter growth rate.

BCA, now the country'€™s biggest private bank, posted a 19.7 percent rise year-on-year in its outstanding loans in the first quarter of 2014 and an 11 percent annual increase for the whole year.

It will continue to monitor its deposit interest rate to be able to reduce costs and maintain profitability amid slower credit growth, according to Jahja.

'€œWe have reduced our time deposit rate by around 200 bps [basis points] since August 2014, whereas in terms of lending, we have slashed it by 25 bps to 107 bps,'€ he said.

BCA vice president director Eugene K. Galbraith said that the bank might see its net interest margin (NIM) '€” a main profitability indicator '€” slightly squeezed this year compared to the previous year as a result of the sluggish business.

'€œWe are trying to keep it [the NIM] at the same rate as in 2014, but it will be tough for the rest of the year because we have not seen that much demand for loans,'€ Galbraith said.

BCA was able to maintain a consistent NIM for four consecutive quarters in 2014, with a 6.5 percent margin in each quarter. It ended up reaping Rp 16.49 trillion (US$1.27 billion) of profit.

Meanwhile, during the meeting, shareholders of the bank approved a dividend payout ratio of 22 percent for the 2014 financial year.

The total dividend amount stood at Rp 3.65 trillion '€” equal to Rp 148 per share '€” and already included its interim dividend that it paid out in December.

Jahja said that its capital status, represented by a capital adequacy ratio (CAR) measurement, remained sound at 19 percent, even after it paid the dividend. '€œThe current CAR level can support our business expansion for the next two to three years,'€ he said.

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