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BCA eyes conservative loan growth for 2019
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Bank Central Asia deputy president director Eugene Keith Galbraith (left) talks to president director Jahja Setiaatmadja. (thejakartapost.com/Anton Hermansyah)
I
ndonesia’s biggest private lender Bank Central Asia (BCA) is aiming for rather conservative loan growth this year amid global economic uncertainty, while still hoping for a higher demand in corporate lending.
While it chose to be cautious in 2019, the bank had always been able to book loan growth exceeding its target in the past few years, said BCA president director Jahja Setiaatmadja in Jakarta recently.
“We are still being conservative this year; we expect our loan growth will hover between 8 and 9 percent,” he said in a public exposé.
Throughout 2018, BCA’s outstanding loans increased 15 percent to Rp 537.9 trillion (US$38.05 billion).
More specifically, corporate loans surged 20.4 percent to Rp 213.3 trillion, while commercial loans and loans to small and medium enterprises (SMEs) rose 13.4 percent to Rp 183.8 trillion.
Meanwhile, consumer loans only grew 9.7 percent to Rp 140.8 trillion.
The consumer lending comprised mortgages as well as vehicle loans and credit cards.
Mortgage loans grew 12 percent to Rp 87.9 trillion, while vehicle loans and credit card lending rose 4.4 percent to Rp 40 trillion and 11.8 percent to Rp 12.9 trillion, respectively.
BCA’s executives acknowledged that the aggressive hikes of Bank Indonesia’s (BI) benchmark interest rate – the seven-day reverse repo rate – by 150 basis points to 6 percent in 2018 had squeezed the lender’s consumer loans as lending rates went in an upward trend.
In an effort to improve loan disbursement in the consumer segment, the bank used various marketing methods, such as holding BCA Expoversary, an exhibition commemorating the bank's 62nd anniversary, at which a number of promotions were offered.
The promos offered at the recent expo included a 5.62 percent interest rate for home mortgages and a 3.5 percent rate for vehicle loans, far cheaper than the regular rates.
While acknowledging challenges in the global economy, the bank managed to maintain a gross non-performing loan (NPL) ratio within its risk appetite level at 1.4 percent as of December 2018, down from 1.5 percent a year earlier.
The bank also managed to book double-digit net profit growth at 10.9 percent to Rp 25.9 trillion throughout 2018.
The net profit was driven by the growth in net interest and other operating income that grew 10.6 percent to Rp 63 trillion, said BCA corporate secretary Jan Hendra.
Net interest income increased 8.3 percent to Rp 45.3 trillion, while other operating income grew 17 percent to Rp 17.7 trillion.
“Net profit growth is the balance of these two elements [net interest income and fee based income],” Jahja said. “If there is a pressure to net interest margin [NIM], we will try to increase the fee based income.”
The fee based income will be grown through the utilization of digital technology.
In 2019, BCA allocated Rp 5.2 trillion for technological development.
So far, BCA has developed a number of technological innovations, such as BCA keyboard and BCA OneKlik. In March, it will soon enable customers to open a bank account through a smartphone app.
BCA plans to collaborate with Chinese mobile payment giants WeChat and Alipay, so that their apps can be used in the bank’s online platforms.
Through these partnerships, BCA hopes it will be more convenient for Chinese tourists when conducting transactions in Indonesia.
“So, if there are Chinese tourists that do not bring Visa cards or [other] credit cards, or cash, they can still conduct transactions in our merchants using their gadgets via WeChat pay or Alipay,” Jahja said.
