Private lender Bank Central Asia (BCA) will continue to implement its recipe for success: prudence, which resulted in a positive financial performance last year despite the banking sector’s sluggish growth in lending and soaring bad debt.

“Our strategy [for this year] is not to push ourselves too hard. We remain optimistic that this year will be better than last year although we won’t get back to our glory days of 2014-2015,” BCA president director Jahja Setiaatmadja told a press briefing in Jakarta on Monday.

“We will remain prudent in our loan [disbursements].”

BCA, the largest private lender by assets, boosted its outstanding loans to Rp 415.9 trillion (US$31.12 billion) as of December last year. The loans rose by 7.3 percent year-on-year (yoy), slightly below the industry’s loan growth of 7.9 percent in 2016.

BCA achieved the loan growth on the back of a 12 percent annual rise to Rp 530.13 trillion in its third-party funds.

The growth rates helped its loan-to-funding ratio (LFR) to stand at 77.1 percent, below the 82 percent minimum standard determined by the financial authorities.

Jahja attributed the slow loan disbursement to the sluggish economy, which adversely affected people’s demand for credit.

“People will ask for credit if they have the need, but if their business is still slowing down, why should they add interest costs?” he said, adding that it was a logical consequence of the current situation.

Indonesia’s economy expanded by 5.02 percent last year from 4.88 percent recorded a year earlier, which was the slowest growth in the last six years.

The corporate segment accounted for 37.2 percent of BCA’s loans, followed by the commercial and small and medium enterprises (SMEs) segment with 36.5 percent and consumer segment with 26.3 percent.

“Infrastructure projects helped the corporate loans greatly,” BCA corporate business director Rudy Susanto said.

The lender channeled around Rp 500 billion to airport projects, Rp 300 billion to rail and Rp 400 billion to toll-road projects in 2016. “We have processed many loan proposals for infrastructure, but the loan draw-downs have been quite delayed. We don’t expect them to occur within three months,” Rudy said.

Going forward, the lender is pinning hopes on the expected infrastructure and construction boom to support its loan growth of between 10 percent and 11 percent in 2017.

BCA plans to pick projects with positive cash flows and which show profitable returns in a five-year period. “If there are projects that only [turn in profits] after 10 to 12 years, they are not suitable for us,” Jahja said, claiming that the strategy was aimed at keeping its financial performance up to par.

BCA’s non-performing loan (NPL), or bad debt, ratio stood at 1.3 percent of its total loans in 2016, compared with 0.7 percent recorded in 2015.

The ratio, however, was lower than the industry’s ratio of 2.9 percent in 2016.

BCA recorded the highest NPL ratio in the commercial and SME segment at 2.1 percent. “Bad debts in the commercial and SMEs segment mostly came from the domestic coal sea logistics business,” BCA director Inawaty Handoyo said.

The bank increased its loan-loss provision amount by 38.5 percent yoy to Rp 12.5 trillion as a precaution against bad debts this year.

“For provision allocation, we always take into account our NPL position, new loans and the possibility of weaker loan quality,” Rudy said.

Publicly listed BCA was able to boost its net profits by 14.4 percent annually to Rp 20.6 trillion last year, supported by a 12 percent upsurge in its net interest income and a 13.2 percent rise in other operational income.

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