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BCA H1 net profit contracts as loan growth cools, bad debts rise
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Customers walk out of a Bank Central Asia (BCA) automated teller machine (ATM) center in Jakarta in this undated photo. (JP/Nurhayati )
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ublicly listed Bank Central Asia (BCA) saw an annual contraction in its net profit in this year’s first six months as the pandemic held back loan disbursement and pushed up bad debts.
BCA, the largest private bank in Indonesia by assets, booked Rp 12.24 trillion (US$843.58 million) in net profit during the first half of the year, down almost 5 percent from the same period last year.
The bank’s second-quarter net profit amounted to Rp 5.66 trillion, a 16.8 percent contraction year-on-year (yoy).
“If we look at the profit component before the deduction of provisions and taxes, which is the operational result, it is still considered good,” BCA president director Jahja Setiaatmadja said during a press conference on Monday.
BCA’s operating income grew 10.3 percent yoy to Rp 37.78 trillion by the end of the first half, supported by 10.6 percent growth in net interest income and 9.6 percent growth in noninterest income. Meanwhile, its preprovision operating profit increased by 15.8 percent to Rp 21.53 trillion.
The COVID-19 pandemic has hit various business sectors and battered demand as customers are forced to stay at home while offices, shops and factories close their doors to help curb the coronavirus spread. As a result, loan demand also depleted while more debtors faced difficulties with repayments.
Indonesian banks' nonperforming loan (NPL) ratio, which represents the ratio of bad loans to total loans, rose to 3.01 percent in May from 2.89 in April. Loan growth, meanwhile, fell to 3.04 percent yoy in May from 5.73 percent in April.
BCA’s loan disbursement annual growth also cooled to 5.3 percent in the first half from 11.5 percent recorded in the same period last year. Its loan disbursement stood at Rp 595.14 trillion as of June.
Most of the loan growth came from the corporate segment, which increased by 17.7 percent yoy, while loan disbursement for the commercial and small and medium enterprise (SME) segment contracted by 0.9 percent and that for the consumer segment shrank by 5.1 percent.
BCA also saw its NPL ratio increase to 2.1 percent as of June, swelling from 1.4 percent in the corresponding period last year. As a consequence, it has increased its loan-loss provisions by 20.8 percent yoy to 204.5 percent of its NPL as of June.
As part of the COVID-19 relief program, the government rolled out a loan restructuring program earlier this year to help banks and borrowers weather the impact of the pandemic.
“From March to June 2020, BCA has worked on loan restructuring proposals amounting to Rp 115 trillion from 118,000 customers, or approximately 20 percent of total loans,” Jahja said in a press release published following the press conference.
He expected total restructured loans to reach 20 to 30 percent of BCA’s total outstanding debts.
“This regulation is very helpful, because the restructured loans can be classified as good loans, hence they do not have to be downgraded according to normal criteria,” BCA financial director Vera Eve Lim said during the press conference.
The bank’s third-party funds, meanwhile, grew by a strong 13 percent yoy to Rp 761.6 trillion, propped up by a 12.8 percent growth in current accounts and savings accounts (CASA) and a 13.6 percent growth in time deposits.
BCA also saw its internet banking transactions value climb by 5.7 percent yoy, while its mobile banking soared by 30.4 percent in the first half.
Mirae Asset Sekuritas Indonesia analyst Lee Young-jun projected the bank’s corporate loan would continue being the driver in the second half as a sharp decline in consumer segment was expected.
“Nevertheless, we think BCA’s earnings will bottom out in the second half on the back of stabilizing business, strong franchise and government’s stimulus,” the analyst wrote in a report published on Tuesday.
The bank’s stocks, traded at Indonesia Stock Exchange (IDX) under the code BBCA, climbed 0.98 percent as of 12:18 p.m. on Tuesday, while the benchmark, the Jakarta Composite Index (JCI), slipped 0.15 percent. The stocks have lost 7.85 percent of their value so far this year.
