B

ank Central Asia (BCA), the country'€™s third largest bank, said its financial performance would be resilient enough to cope with the impact of the sharp depreciation of the rupiah against the US dollar even if the rupiah continued falling.

BCA president director Jahja Setiaatmadja said its stress test showed that the bank would be resilient enough to face rupiah depreciation as it had minimal exposure to dollar-denominated loans.

'€œWe learned a lot from our experience in 1998,'€ Jahja said on Friday as quoted by Kontan newspaper in reference to the time when Indonesian currency fell to as low as Rp 15,000 per US dollar, a situation which led to Indonesia'€™s worst ever financial crisis.

Jahja said that during the 1998 financial crisis, the share of dollar-denominated loans in the total portfolio touched 35 percent, which significantly affected the bank'€™s financial performance. The bank then reduced the quantity of dollar loans to reduce the risk of a second crisis.

BCA recently joined a stress test carried out by the Financial Services Authority (OJK) to gauge the impact of the depreciation of the rupiah on its financial performance. The test was based on a simulation of what would happen if the rupiah fell to Rp 14,000 per dollar.

The rupiah fell 0.14 percent to close at Rp 13,787 per dollar on Thursday, based on data compiled by Bloomberg. Meanwhile, Indonesian currency reached 13,381 in the Wednesday afternoon trading session, the weakest level in 17 years since the 1998 Asian financial crisis.

Dollar loans stood at US$1.5 billion, 5.7 percent of BCA'€™s total outstanding loans, which was Rp 347 trillion in the first half of the year, up 7.9 percent from the previous year

Meanwhile, Sinarmas Sekuritas analyst Evan Lie Hadiwidjaja said that BCA had been conservative about its loan expansion, highlighting quality over loan portfolio growth to avoid non-performing loans (NPL).

The bank'€™s NPL for the first half of the year stood at 0.7 percent, still under the average for the country'€™s banking sector, 2.5 percent.

Meanwhile, publicly listed PermataBank also conducted a routine stress test to measure the bank'€™s capital resilience against the worsening economy. Among the factors tested were the performance of borrowers, loan-loss provision, NPLs, risk-weighted assets (RWA) and capital adequacy ratio (CAR).

PermataBank'€™s president director Roy Arman Arfandy said the bank used different scenarios of rupiah value in the stress test. '€œThe impact of the rupiah fluctuation on the bank'€™s NOP [net open position] is not significant to the bank'€™s performance, as the bank'€™s openness to foreign exchange is relatively small,'€ said Roy.

He added that in the scenario where the rupiah stood at Rp 14,000 per dollar, the bank would not suffer significantly in its NPR, CAR and loan to deposit ratio (LDR).
However, the rupiah depreciation would affect corporate borrowers, which are engaged in import activities, he said.

The bank has taken measures to keep its financial performance intact, including a more careful approach to channel loans in the commodities and automotive sector to keep the NPL level down, as well as focus on the earnings from fee-based income.

Its fee-based income increased by 34.9 percent to Rp 1.1 trillion in the first half of the year from Rp 815 billion in the same period last year. The increase was driven by bancassurance, trade finance, as well as its equity participation in PT Astra Sedaya Finance. Meanwhile, its net profit was up 5 percent to Rp 837 billion in the first half of the year, compared to Rp 801 billion last year. (fsu)