The country'€™s largest private lender, Bank Central Asia (BCA), continued to book slower year-on-year (yoy) growth in the first half of the year, ending the first six months of the year with rare single-digit growth in its bottom line.

With the economic slowdown pinching the publicly listed lender'€™s credit growth, BCA will retain its conservative target to see its outstanding loans increase by around 12 percent this year, president director Jahja Setiaatmadja said in a press conference.

BCA reported that its consolidated net profit grew by around 8.8 percent on an annual basis to Rp 8.5 trillion (US$595 million) during the period between January and June, from Rp 7.8 trillion in the same period last year.

The annual net profit growth booked during the first half was only around one-third the lender registered in the first six months of last year. BCA'€™s net profits jumped 24.2 percent yoy during the first half of 2014, whereas a year before, the growth rate stood at 19.3 percent.

The slower pace in net profit growth is a continuation from the lender'€™s first quarter performance, hauled by lagging economy and decelerating credit demands.

BCA'€™s total outstanding loans remain stagnant at around Rp 347 trillion along the year, whereas yoy the lender'€™s credits were only up by 7.9 percent, nearly halved from the 14.6 percent annual growth it posted in the first half of last year.

Jahja said that it might be difficult for BCA to be able to book growth as outstanding as last year amid the economic slowdown, citing how weakening purchasing power might affect credit growth in the future.

'€œWe hoped we would be able to book growth like in the past, when we usually saw a low first quarter, picking up second quarter and growing second half. However this is a new era. Although the unemployment rate is declining, a number of our clients have reported that they have been laying off their workers as business is slowing down,'€ he told reporters.

'€œMassive layoffs will lead to decreasing purchasing power and might affect credit growth. Credit will grow but it won'€™t be as extraordinary as previous years, so we chose our target of 11 percent to 12 percent this year,'€ he said.

All of BCA'€™s lending segments '€” corporate, commercial, small and medium enterprises and consumers '€” booked a much slower pace in the January to June period, compared with last year'€™s achievement. All of the segments, according to the report, were growing by less than 10 percent annually during the first half, while they were up double digits last year. Corporate lending declined by 6.1 percent year-to-date.

With slower business, BCA also saw slower growth in its net interest income. Its net interest income rose at a pace of 11.4 percent to Rp 17.18 trillion, while the pace was 25.6 percent last year. The non-interest income climbed by 23.9 percent to Rp 5.4 trillion.

BCA'€™s result was in line with Nomura Holdings'€™s Jaj Singh and Manjith Nair report, which projected that Indonesian bank earnings for the second quarter would be disappointing as they were likely to show a steep increase in credit cost and slowdown in loan growth.

'€œOur economist estimates that the economy in the second quarter slowed to 4.3 percent yoy from 4.7 percent yoy in first quarter. We are projecting only 3 percent yoy growth in net profits in the second quarter.'€

Shares of BCA, listed under the ticker BBCA, showed a negative 1.44 percent year-to-date return, according to Bloomberg data.

Popular

RI, Australia strengthen partnership on taxing crypto assets

Analysis: Indonesia denies normalization with Israel to enter OECD

Citroen to produce electric cars in Indonesia