Growth Forecasts 2015: Bank Central Asia (BCA) to Acquire Small Banks
While other leading Indonesian banks are eager to expand business by opening branches in neighbouring countries, Bank Central Asia (BCA) stays focused on the domestic market. BCA, Indonesia’s largest private bank, is eyeing to acquire several smaller banks in Indonesia as part of its (inorganic) business growth model this year. BCA seeks smaller banks that have good financial performance, match with BCA’s business and are not too expensive (with a price to book value of between one and two times).
Jahja Setiaatmadja, President Director of BCA, said that 2015 is a good year to acquire smaller Indonesian banks as the price to book value (PBV) of these banks has declined after a year of slowing growth in 2014. Earlier this year Setiaatmadja mentioned that BCA allocated IDR 1.5 trillion (USD $117 million) for its 2015 capital expenditure (capex). However, most of these funds (about 75 percent of capex) will be injected in existing subsidiaries. The remainder can be used to acquire small Indonesian banks.
These smaller banks that are targeted by BCA are categorized under BUKU 1 and BUKU 2. BUKU (Bank Umum Kelompok Usaha) is a categorization system introduced by Indonesia's central bank (Bank Indonesia) which divides Indonesian banks into four categories based on banks' capital. Bank categorized under BUKU 1 are those banks that have capital of less than IDR 1 trillion, BUKU 2 are banks with core capital of between IDR 1 trillion and IDR 5 trillion, BUKU 3 banks are banks with core capital of between IDR 5 trillion and IDR 30 trillion, and, lastly, BUKU 4 banks are banks with core capital of at least IDR 30 trillion.
However, as it will require time for BCA to analyse the performance of these smaller banks, some analysts doubt whether we will see take-overs this year.
Bank Central Asia's Financial Highlights:
| 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | |
| Net Income | 6,807 | 8,479 | 10,820 | 11,721 | 14,254 | 16,511 |
| Net Interest Income | 14,009 | 13,921 | 18,054 | 21,238 | 26,425 | 32,048 |
| Total Assets |
282,392 | 324,419 | 381,908 | 442,994 | 496,305 | 552,423 |
| Total Liabilities | 254,536 | 290,311 | 339,881 | 391,096 | 432,338 | 472,550 |
| Earnings per share¹ | 279 | 348 | 444 | 480 | 579 | 669 |
| Non Performing Loan Ratio² | 0.7% | 0.6% | 0.5% | 0.4% | 0.4% | 0.6% |
| Loan to Deposit Ratio (LDR) | 50.3% | 55.2% | 61.7% | 68.6% | 75.4% | 77% |
in billion IDR rupiah, except otherwise indicated
¹ in IDR rupiah
² gross
Sources: Bank Central Asia & RTI
The performance of BCA, Indonesia’s third largest lender by assets, is expected to improve in 2015 from last year’s performance. Credit growth is estimated to grow between 12-15 percent in 2015, up from 11.2 percent in 2014. BCA has a loan-to-deposit ratio of 77 percent, signalling healthy liquidity. The bank’s loan-to-deposit ratio is expected to increase to 78.9 percent this year in line with growing credit growth.
BCA’s non-performing loans ratio (NPL) may increase from 0.6 percent in 2014 to 0.7 percent in 2015 due to troubled corporate credit (disbursed to companies that are restructuring). Still, a 0.7 NPL ratio is lower than the ratio of other Indonesian banks.
Due to BCA’s sound corporate and financial performance its price-to-book value (PBV) was relatively high at 4.6 times in 2014. This may decline to 3.9 times in 2015.
Net interest income of BCA is estimated to grow 14 percent to IDR 36.55 trillion (USD $2.8 billion) in 2015 as the company’s costs are lower than last year after the implementation of lower deposit rates. Meanwhile, third-party funds may grow 11.9 percent to IDR 501.4 trillion in 2015.
Stock Quote Bank Central Asia - BBCA: