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Digital banking: BCA joins the fray with planned IPO
BCA president director Jahja Setiaatmadja said the target for the initial public offering (IPO) of BCA Digital was in one or two years.
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ank Central Asia (BCA) plans to list digital banking arm BCA Digital on the Indonesia Stock Exchange (IDX) within one or two years as the country’s top private lender seeks to capitalize on stock market enthusiasm for such banks.
BCA president director Jahja Setiaatmadja said the parent company planned to inject additional capital to make BCA Digital more “sizable” in luring investors ahead of the digital bank’s Initial Public Offering (IPO).
“Everybody is after digital [companies],” Jahja said in an online briefing on Thursday. “By far, investors are not interested in small, new companies, except for digital ones.”
BCA Digital, which was officially launched in July, currently focuses on providing payment services such as e-wallet top-ups and bill payments.
The IPO plan comes at a time when the country is seeing a pandemic-induced boom in its digital economy, as reflected in the projected growth of 19.1 percent in digital banking transactions to Rp 32.2 quadrillion (US$2.22 trillion) this year, according to Bank Indonesia.
Read also: Bank Jago effect’: Small banks’ shares surge on consolidation, digital bank boost
Bank Jago, trading under the ticker ARTO, was acquired last year by ride-hailing and payment unicorn Gojek as the latter sought wider access to digital banking services. Bank Jago has seen its share price surge by a staggering 351.46 percent to Rp 15,875 by Thursday from the start of the year.
BCA also booked 49 percent annual growth in transaction value on mobile banking and 32.8 percent annual growth in internet banking in the first six months of the year.
But the pandemic has put pressure on the bank’s loan disbursement, which was down by 0.3 percent year-on-year (yoy) to Rp 593.6 trillion in the January-to-June period. Corporate loans grew by 1 percent, while small business and consumer loans contracted. However, mortgages posted positive growth.
Read also: BCA records net profit dip in 2020 amid higher provisioning, pandemic impact
“In credit growth, our expectation is not far from the range between 4 and 6 percent for this year,” said BCA finance director Vera Eve Lim. “If things improve, I believe the demand will grow quickly.”
BCA booked Rp 14.4 trillion in net profits in the first six months, up by 18.1 percent from last year in large part thanks to the low base effect. Net interest income also was also up 3.8 percent yoy to Rp 28.2 trillion over the period.
The bank also saw the ratio of its non-performing loans to total loans rise by 0.3 percentage points to 2.4 percent from a year earlier.
However, the bank’s ratio of loans at risk, including restructured loans due to the COVID-19 pandemic, showed an improvement as it was down 0.3 percentage points to 19.1 percent in the April-to-June period from the previous quarter.
